In the aftermath of the financial crisis, after reading so many reports in the media about evil banks, this nugget of wisdom dawned on me:
If it’s too expensive, don’t buy.
You must be saying “Duh!” but let me explain. No, I’m not referring to people buying homes they can’t afford, although that would apply too. I’m talking about the credit card interest rate hikes, late fees, bank overdraft fees, ATM surcharges and so on.
When we buy physical products, we consider all aspect of the product: brand, color, size, weight, what it does and doesn’t do, etc. Services are no exception.
The financial products come as a whole package. Interest rate, rewards, fees, availability of facilities, and quality of customer service are all part of the whole package. If I like what I’m getting, I use the product and I pay the price. If I don’t like it, I go somewhere else. It’s as simple as that. There’s no point of harping on what you don’t like. If it’s too expensive, don’t buy. Buy something you like. That’s my philosophy.
There are 8,000 banks in this country, plus another 8,000 credit unions. I’m sure there is a better bank or credit union if someone doesn’t like their current bank. If the bank dings you with excessive fees, don’t use them. There are so many other choices!
Sure there is a cost of switching. But that’s the point of making a choice. You weigh the financial and emotional cost of staying against the value of not having to set up everything again. If avoiding a switch is more valuable to you, then stay and be happy, because you’ve made the best choice for yourself. I just don’t understand why people would just complain and not do something about it when there are clearly better choices. Consumers are in the driver’s seat. Take the wheel. If it’s too expensive, don’t buy.
When I first started this blog three years ago, I issued a number of TFB Awards. I wanted to recognize the companies that provided good products to their customers. Since then, better products have emerged. Over the next few weeks I will re-visit these categories and issue the TFB Awards for 2009. Don’t worry, they won’t be veiled affiliate promotions. None of them pay me to say good things about them.
Instant diversification in a low-cost ETF portfolio. Convenient and disciplined with automatic rebalancing. Minimize your taxes. Betterment.com.