Blogging For Money

Have you observed that banks are really increasing advertising about their high interest rates for checking and savings accounts? Why are they doing this? How are they able to do it?

Banks make profit in the economic system by bringing in loans. The sum of money that banks can lend is immediately affected by the reserve prerequisite set by the Federal Reserve. The reserve requirement is currently 3 percent to 10 percent of a bank’s total deposits. This amount of money can be held either in hard cash or in the bank’s reserve fund with the Fed. To see how this bears upon the economy, think of it like this. When a bank gets a alluvial of $100, bearing a reserve requirement of 10 percent, the bank can then lend out $90. That $90 comes back into the economy, purchasing trade goods or services, and usually winds up deposited in another bank. That bank can then lend out $81 of that $90 deposit, and that $81 enters the economy to buy goods or services and in the end is posited into another bank that continues to loan out a per centum of it.

While the cost to loan individual money goes down for a bank, the bank can bring down your interest on a charge card or financing for a home. As is true on the banking side, since banks are acquiring a break recently on the cost to lend, they don’t need as much interest from the customer to cover up the spread. They could either hang on to the additional revenue for themselves or propose an incentive to the customer by providing a higher interest rate on free checking and savings accounts. This benefits current clients and lures new customers in. Since banking has become so competing, most banks follow suit so they will not be left out.

The banks do put conditions on some of these account statements that you need to be aware of. You may have limits on withdrawals, number of checks you write, and you may have to have a minimal number of dealings per month. The main reason the banks have stipulations is simple; its all geared in their favor. Limiting withdrawals keeps more of your money in the bank that they use to invest and loan and make more money for, well, the bank. Constraining the number of checks you compose saves the bank money because it costs them further to process paper. And, it also forces you to use your debit card more. And that is why they have a minimum number of transactions, so you use the debit card more. By using the debit card or credit card, merchants are paying up a fee to the bank for every transaction. Put differently, never mind how you slice it, the banks are making money. It then adds up to try to get more or less of that money back in a high interest checking accounts or savings accounts.

There may be penalties for not complying with these conditions. Most of the requirements banks have are not overly constraining. At the end of the day, higher interest rates for checking and savings accounts are a great chance to gain some base in this economic system.

So I decided last night that it was the time for me to withdraw my PayPal funds via the bank facility that they have provided. In case you didn’t know already, PayPal has now allowed direct withdrawal of funds to Malaysian banks. However, I noticed that the exchange rate for RM from USD in the PayPal system is significantly lower than the current currency exchange market rate.

Here is the currency rate as determined by PayPal when I used their internal currency converter from USD to RM.

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There is good news for those who are looking for a debit card to do online transactions or to verify their PayPal accounts. From a communique that I have recently been privy to (made available to me by a little bird who works in Maybank Credit Card Centre), I was made to understand that Maybank is going to activate their internet transaction acceptance feature for their VISA debit card on the 14th of March 2009. However, this activation is only for internal purposes and the public will only be able to enjoy this feature a week later.

Currently, the Maybank VISA debit card is only able to make purchases offline and does not work with any internet transaction. The reason why Maybank delayed this feature for so long is because of card fraud and they needed to ensure that the security checks are in place.

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I recently applied and received my Maybank VISA debit card at the Maybank Kajang branch. Application was fast and despite the large number of people applying for it, I received the card within one hour. It should be noted that according to the bank, the card is not yet ready for internet transactions and this was confirmed when I tried to add the card to my PayPal account but was rejected. Despite this, the bank told me that they expect to roll out this feature “soon” and some reports say that it could be as early as June 2008.

Regardless, I do suggest that those of you who want a VISA debit card to apply early for the card to avoid the “rush” in getting the card. The card can still be used at retail outlets which support the VISA feature, I used it to buy a new monitor holder with my Maybank VISA debit card! Always useful to have another debit card handy anyway….

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Yesterday I was literally running around back and forth from the Immigration Department to the bank and the computer shop and then back again. I rewarded myself with a nice relaxing evening at Starbucks. So taking inspiration from the all-famous Mastercard advertisement, you can sum it up as follows:

Getting a Malaysian passport – RM300
Buying computer software – RM60
Applying for a Maybank VISA Debit card – RM12
A nice drink and sugar donut at Starbucks – RM18
Computer laptop – RM1999
Laying back on the sofa while chatting online with the girl you love – PRICELESS!

There are some things which money just cannot buy. For everything else, you have the moola to pay for even the services of a san diego contract attorney. Yeah, I have the money and I have no qualms flaunting it.