Banks Charges and How They Affect You
Getting your first bank account may seem like a big achievement at first, but it can be quite a hassle as well. One big pain is the understanding of your bank’s special charges and under which circumstances they may be levied against you. Let me explain to you what a bank charge is.
It is the way for banks to charge you for all of the extra services that you may or may not be aware that you are receiving. These can unfortunately be quick unfair for some consumers as bank charges can be very difficult or impossible to reverse except under the most extreme of circumstances. For all you know, there may be an incorrect charge that will end up costing you far more money than you had ever bargained for.
Do you want to gain an understanding of bank charges? Let us study some of the common charges that are levied by banks. One well known instance is the instance of an overdraft. An authorized overdraft is sometimes exempt from bank charges. In this instance the user just has to set up a temporary borrowing plan with their bank which will let them be slightly in the red for short periods of time without getting nailed with large charges.
But if your overdraft has not been authorized, you could be charged heavily. If you slip one number and end up 10 dollars in the red through writing a check, you can soon face large overdraft fees established by your bank alongside high interest charges that they will access.
The worst thing that a bank user can do is assume that many of their banks “services” are free. Most often, these “services” are charged. Even small errors could be charged by your bank. These include problems as simple as just using your ATM card more than your contract allows in a year or using more check books than you were allocated for the full year. One very serious problem is if you are forced to use an ATM from another bank.
Although some banks do not charge for this, other banks do. These can build into substantial sums quite quickly. These are really just normal services that many people would assume were just part of any package. But of course, you should not be making assumptions in the first place. Ignorance isn’t always bliss.
The best way that you can possibly defend against unexpected bank charges is to fully look through all of the papers and contracts describing every service for your account. Make it a point to read the fine print if you do not want any extra expenses in the future.
If you want to have a bank account then you need to understand the many charges that banks can levy. The fact that you must keep in mind is that there are no freebies. The bank you are dealing with will provide you assistance, but only for a charge. They have little incentive to not charge a fee when they do you any favors that they don’t have to do.
Read everything that they give you and read everything that you sign. Make sure that you are aware of the various charges that are being levied by the bank.
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How You Can Avoid A Bank Levy ?
A bank levy can be issued for several reasons. It is most commonly used by the IRS and creditors. For instance if you have not paid your taxes or a debt that you owe.
When a bank levy is issued it means that your account is frozen you are not able to withdraw anything out of your account. And the funds that was in your account can and usually will be seized.
Before a person has a bank levy issued to his/her account they will receive a letter, a phone, or some type of notice letting them know that action will be taken if they don’t pay up on what they owe.
It is important that as soon as the bank levy is issued to your account that you contact the court as soon as possible if it is issued by a debtor. There is a way for you to be able to receive your funds back and make a payment plan with the debtor. This has to be done within 30 days of the levy being issued.
Now when the IRS issues a levy the money is not refundable and the bank levy will stay on your account until you pay all of the taxes that you owe. Although you cannot withdraw money at this time you are able to make deposit so if you have an employer that deposits your check into your account it will be seized.
When a bank levy is issued to an account the banks usually will charge the account holder $100 or more for every time there is a bank levy issued to that persons account.
The IRS served banks with memos to guide them on how they will work with them when issuing bank levyies. They send these memos to make banks aware of the laws governing the disclosure of bank account information.
The law that was shared on business tax recovery website was “Title 26 United States Code Section 6333 of the Internal Revenue Code (IRC) authorizes the Service to examine any books or records pertaining to property or a right to property subject to a levy. 1 The Treasury Department interprets this section to mean that, at a minimum, the Service would be entitled to a bank record indicating a levied accounts balance on the date the levy was served.”
This is only a portion of one of the guiding memos that the IRS has served banks with. When an IRS issues a bank levy the bank is required to give the IRS all of the taxpayers account information either willingly or by summons.
When the bank levy is issued the account is frozen immediately whether the bank gives the information right then or if the taxpayer’s information has to summonsed.
One way to avoid this happening to you is of course pay your taxes and your debtors. It is not a pleasant thing to go to your bank account one day and find you cannot withdraw money or pay your bills.
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Gold Plated Business Banking
I always remember as a child, admiring my mother’s wedding ring. There are all types available now, but at the time it was quite unusual. With its angular design and diamond cut patterning with inset diamonds she was as proud of it today as the day she got married.
I always enjoyed the stories of her great uncle, a Jewish jeweller in London, who designed this ring specifically for her. She would tell me about how she would sit and watch him work when she was a child, unable to take her eyes off his gold tooth. He was always cheerful and smiling and proud of his work which was made it so special when he presented her with the wedding ring design years later.
Jews are well known for their trade as jewellers and also for their ownership of gold. Their money making abilities are sometimes unfairly looked down upon. Even until recent times, Jews were pushed out of so many professions by prejudice that they were forced to take the jobs no one else wanted, such as tax and rent collecting and money lending.
Obviously, passing these professions down to predecessors has given them the time to become experts at what they do. This makes them popular with today’s banks and business banking is not a problem for them.
Banks should be the safest of houses and many people have put their faith in safe deposit boxes. These are supposed to be the securest of places for valuable but have had some scorn cast on them in recent years for their dubious banking practices.
It was claimed that, even after it came to light that gold deposits were being made that had been stolen from Holocaust victims, they still continued to accept it.
This was brought to light after a bank security guarded risked death threats to prevent the destruction of Holocaust era records and brought their existence to public attention.
Despite this being a secure system of banking, it is certainly not above the law. In 2000, a US judge approved a $1.85 billion settlement between several Swiss banks and the families of Holocaust victims.
Banking systems have been around since before the dawn of money when people deposited whatever was considered a precious commodity at the time – including grain. However, the biggest asset then, as well as now, is gold bullion.
All the gold that has ever been mined is still in existence today. Value varies very little from year to year. The United States has 16% of all its assets in gold with Chinas reserves being a mere 1%. However, they have expressed interest in increasing their reserve and it is hoped this will push up the price of gold.
The Washington Agreement on Gold limits its member countries to selling less than 400 tonnes of gold per year. This helps to keep the price of gold, and the whole structure of the banking system relatively stable.
In times of inflation, gold has always been seen as a safe commodity as it does not rely on the currency values of any country.
Every year 3000 tonnes of gold goes into jewellery or dental production and around 500 tonnes is now used in automotive electronics on parts such as ignition controls and electronic fuel injection. Gold is a popular choice for electronics as it does not change compositions like other metals after long periods of inactivity.
So, gold is still very much an important commodity but unlike days gone by, is difficult to use in
every-day banking. Business banking still involves cheques and cash but most of it is unseen, using electronic money exchanges and so, back to the gold used in banking but in the electronics.
Expert financier Shaun Parker looks into business banking and the effect gold bullion has on it. To find out more please visit http://www.lloydstsbbusiness.com/accounts/index.asp
A Balanced Banking System
Banking is a business like all others but customers these days seem at the mercy of whatever the lenders want to charge.
Yes, we can shop around but at the end of the day, they’re all in it for profit, gained by ever fluctuating interest rates. They also take risks investing our money without our knowledge and we are susceptible to those investments failing.
However, with the diverse mix of cultures in every country these days it is not that unusual to see a different banking system coming into play.
The Shariah, or Sharia, system of finance has been set up by the Islamic community to comply with their strict laws on banking in accordance with the Qur’an. Sharia law covers all aspects of everyday living for the Muslim community.
Banking and finance are issues that are covered in depth, from personal finances to business banking. Working on a shared profit and loss system makes this system quite different to Western banking. This prevents the bank from monopolising the economy and is less risky to the borrower.
This way, the borrower is more secure, more businesses succeed, more money is borrowed, thus keeping the whole system afloat and everybody from borrower to lender benefits.
Sharia law prevents the collection and payment of interest. So, how do the banks make money?
If a Muslim wishes to utilise a loan to purchase items, the bank actually make the purchase and re-sell to the buyer for a profit that is agreed between the two parties. That profit is set without alteration and it is essential that it is very clear upon the agreement.
No extra charges can be enforced on this loan, even if payments are late. However, rights to the items purchased remain with the bank until the loan is paid in full.
The same principles apply to mortgages. The house is purchased by the bank and resold at an agreed profit to the buyer. Repayments are made in instalments but without the worry for late payment charges. However, a Muslim is expected to meet his repayments without taking advantage.
The land and property will be in the name of the buyer from the outset of the agreement for the security of the borrower but for protection the bank will ask for strict collateral.
As far as business banking is concerned, an individual can borrow interest free money to set up his own business. As with all loans an agreed profit is decided upon from the outset and repaid in instalments.
The borrower provides the labour while the bank provides the finance thus reflecting Islamic law of profit and loss sharing with no one party carrying all the burden of risk/cost of failure.
Money can be lent to businesses, whether existing or new. It is specified that the business must not contradict Muslim beliefs, such as the selling of alcohol or pork, or be involved in any media business which deals in gossip columns or pornography.
Business banking is not free and neither is there any interest imposed. Money is lent on a floating rate interest loan. This means the floating rate is dependent on the company’s individual rate of return.
The banks profit on the loan is equal to a certain percentage of the company’s profits – the profit sharing side of Sharia law. Once the original agreed amount has been repaid, the profit sharing arrangement ends.
So, money can be lent to businesses and it will be dependent on the individual business as to what the repayments will be. Therefore, any business can afford a loan.
Interest is not paid or collected on current accounts so overdrafts are not permitted. However, there is always the option of Hibah (Gift). This is a voluntary payment by a creditor or debtor in return for a loan. This is usually practiced in Islamic banking but is discretionary.
Expert financier Shaun Parker looks into the new business banking culture. To find out more please visit http://www.lloydstsbbusiness.com/accounts/index.asp/