Henry Ford once said that it is a good thing that many people did not know how the banking system worked. If they did, there would be a revolution before the following day.
Several decades have passed since he made this statement, and it seems to be accurate as it was in the 1930s.
This is not to say that banking is a bad omen; they provide us with valuable services and have become an essential part of our lives. Everyone wants to keep their money where it is safe and secured. The truth is that banks are cashing out big time at the expense of an unsuspecting public.
Whether you are taking a loan, spending your money, or saving it, there are numerous ways that the banks make money off of you. The sad part of it is that you don’t even know that you’re being milked.
You’re losing money every year. This is not about the fees you pay on your spending or someone stealing your money; it has to do with inflation.
This is the increase in the prices of goods and services over time. An item you could buy with a Ksh100 note today would cause slightly higher in about a year and much more in ten years. The money that is sitting on your account doing nothing is losing value.
Banks earn from your card transactions. Every time you swipe your debit or credit card, a processing fee is charged.
If you made a purchase of an item at the cost of Ksh 5000 and you paid for it with your card, and the merchant is charged 3% on every payment made, that means a whooping Ksh 150 goes to the bank. Obviously the merchant won’t be happy paying for this, so he will raise the price to accommodate the charges. Care shoul be taken not to accumulate additional charges while using cards.
Your money in the bank is not physical; they are merely figures in electronic reacords. This is because banks use the money to do business.
They give out this money in the form of loans. To you, your money is lying in the bank, but in reality, your money is in other places making more money for the banks.
However, this doesn’t mean that your money is not safe because there is insurance, and the government is ready to step in in case of a loss. Only know that keeping money in the bank is not the same as keeping it in a box where you can access it anytime.