By Haddon Libby
With the most consumerist of seasons upon us, what is the first thing you think of?
Your bank, right?
Okay, probably not (unless you are overdrawn) but this is a most joyous season for banks as they will be making buckets of money from your consumerist consumerizing.
When you use your debit card to pay for something, banks make about a quarter. If you are charging your way into 2016, banks make about $1.30 for every $100 you spend. If you keep a balance on that credit card, you typically pay from 12% to as much as 32% to borrow money that the bank pays 0.01% to depositors for or a rich 0.3% for a ‘high’ interest checking account.
For the record, if you have to leave $10,000 with a bank for a year to make $30, that ain’t high. I have an idea – how about the bank splitting that 18% credit card rate with you? Considering that it is our money that they are lending, it seems reasonable that we should go halfsies, no?
As for those credit cards that ‘pay’ you air miles that you can use anytime that you like so long as you travel on the 3rd Thursday of months that do not end in the letter ‘y’ or ‘r’, the store that you shop at gets to pay for that. And we all know that when the store pays for something, they make that money back from you in the form of higher prices.
Gallup polling estimates that Americans on average will spend $830 each this holiday season, up a whopping $110 from last year. Those earning at least $75,000 will spend $1,227 while middle-income earners will spend $786 and those under $30,000 spending $460.
With Americans spending approximately $700 billion on the holidays, you can see why bankers are so jolly this time of year. Overall, the banks process about $4 trillion in transactions annually for at least $50 billion in fees not to mention the usurious rates that they charge.
Citibank is the largest credit card issuer with 110 million cards in circulation domestically (18% market share). Chase is 2nd at 16% followed by Bank of America at 13%, Capital One with 10%, American Express at 9%, Discover having 7% and Synchony at 5%.
So which banks do Coachella Valley residents use the most?
A whopping 50% of us use Wells Fargo (22% market share), Bank of America (18%) or Chase (12%). Following the acquisition of 0.1% market share Security Bank of Riverside by 4.5% market share Pacific Premier of Orange County, we have twenty banks serving the area. Citibank which is one of the largest banks in the United States ranks only 12th locally with a 2% market share.
While all banks doing business in the Coachella Valley are safe and sound and in no way at risk of failing, some banks are sounder than others. According to BankRate, the strongest bank is El Centro’s Community Valley Bank with a 99.3 score (1:100 scale). This means that only 0.7% of all banks in the nation are financially stronger than Community Valley Bank which just opened a branch in the Coachella Valley. Rounding out the top five are OneBank (98.5), Pacific Western of San Diego (88.5), Pacific Premier (85.3) and Opus (79.3) of Orange County.
Only two banks ranked poorly – Provident Savings of Riverside at 22.5 and Rabobank at 22.6. Rabobank is the bank that recently and abruptly closed the bank accounts of Canadians.
By the way, if you do not want the banks to make money from your holiday shopping, try using cash.
