How does your bank lie to you? Let me count the ways.

If you don’t trust your bank, you’re in good company. With financial regulations unraveling, and in the wake of several shocking banking scandals, it’s remarkable we haven’t all switched to a digital crypto-currency like Bitcoin and ditched our financial institutions.

The latest EY Global Consumer Banking Survey finds customers around the globe have diminishing trust in their banks. While they broadly trust banks to look after their money securely across markets, few have complete trust in their banks to give them unbiased advice that puts customers’ interests first.

In the United States, 57 percent of customers trust their bank but only 33 percent say their financial institution will provide unbiased advice. Those numbers are comparable to the levels of trust found in Germany and Mexico.

Question is, how will banks go about erasing trust? To find out, I asked the financial experts.

Scandals, scandals, scandals!
Banking scandals such as the Wells Fargo fake account debacle, in which it opened 1.5 million accounts without authorization, do nothing to help the situation. There’s also a long history of banking scandals, including those that led to the Great Recession. Perhaps the biggest lie is that the banking industry has learned from its mistakes. It clearly has not.

Free accounts that aren’t actually free.
“Don’t fall for the trap of free checking accounts, because they come with several strings attached,” warns Chris Moon, a banking analyst for He notes that banks often stipulate certain minimums for balance or activity before they will waive your monthly account fee. “The most common requirements are to establish a certain amount in direct deposits to your account, keep a daily minimum balance of a certain amount and make a certain number of debit card purchases each month,” he says. And if you don’t? Well, then it’s not “free,” and you’re stuck with a bank account that can be pricey. Bottom line: “free” is a lie for some customers.

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Deceptive overdraft protection products.
These products confuse customers, according to a study by the Oakland, California-based California Reinvestment Coalition involving secret shoppers. It found banks’ explanations of overdraft programs were “highly inconsistent” and often unclear and incorrect. In other words, they lied. “Overdraft on ATM withdrawals and debit purchases is a debt trap that pushes lower income people out of the banking system,” noted Josh Zinner, co-director of New Economy Project, one of the organizations that participated in the study. “Regulators should ban this product,” he concludes.

Shooting straight (or not).
Speaking of overdraft fees, that’s where banks getcha. “Some banks — mostly smaller ones — will reorder your transactions from highest amount to lowest, instead of chronologically,” says Nick Clements, co-founder of the financial website MagnifyMoney. “This lets them charge multiple overdraft fees. There’s still a considerable percentage of the industry that does this.” Of course, that’s highly unethical — stacking the deck in favor of the bank. But in the absence of regulation, this is what happens.

Yes, we’re a family business!
“The posters you see on branch walls of happy families and small business owners enjoying the personalized service of their family-friendly and pro-small-business bank — these are complete lies,” says Brian Mahany, author of Saints, Sinners & Heroes: Covert Ops in the Wars Against the C-Suite Mafia. Unlike in the 1900s, when banks made decisions based entirely on strict formulas, today’s banks make decisions based on maximizing their profits, “even when they’re involved in wrongdoing,” Mahany adds.

I know what you’re thinking — there ought to be a law! Problem is, when you rein in overdraft shenanigans, protection rackets, “free” accounts and clamp down on the scandals du jour, banks will always find a way around it. It’s not to say regulations are unwarranted, only that the banks will probably be a step ahead of the law.

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And that’s why you have to stay a step ahead of your bank. Not that you should expect a lie from your banker whenever he opens his mouth, but by all means, you should not trust your bank blindly. Do that enough, and you’ve got all the makings of the next big financial crisis.

Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or check out his adventures on his family adventure travel site. Contact him at Read more of Christopher's articles here.

  • Mel65

    Years ago I worked for a bank now part of Chase. If you had $101 in your account and had 4 $25 checks and 1 $100 check presented, they’d absolutely clear the $100 first to charge 4 NSF fees rather than the smaller ones first. Withdrawals were also processed before deposits for the same reason. I’ve used a Credit Union for 20+ years and I wouldn’t go back to a bank for anything.

  • The Original Joe S

    Overdraft: When my good, local bank where I banked for 30+ years got bought by a gang of scumbags which reminds you of a stage coach, the new scumbags did exactly that with the overdraft. I marched right in and took out every cent, removed everything from the safe deposit box, and walked out. Furthermore, they were a “gun-free zone”. I felt sooooooooooooooooooo safe in their bank because I knew that the criminals would NOT bring their guns into the gun-free zone. I got that on good authority from the tooth fairy.

    These same dirtbags tried to scroo a friend out of a mortgage lock-in because he was overseas. Dirty bimbette kept asking for paperwork he had already provided to them.

    They act as if they are doing you a favor by taking your money and screwing you.

    Vote with your feet. I use credit union.

  • James

    That;’s standard procedure for banks — and credit unions. :-(

  • James

    While I agree banks are untrustworthy — the suggestion of a crypto-currency like Bitcoin is a bad analogy. The underlying currency — the dollar — is not the issue here, and if we were to use Bitcoin, or another alternate, the banks would still do what they do.

    My solution is cash. I only use a credit card for very large purchases and internet purposes. I do not give the banks a swipe fee when I spend money.

  • Jeff W.

    Using Bitcoin is a bad analogy indeed. If your bank is somehow robbed, the gov’t — via the FDIC or NCUISF — insures your deposits up to a certain amount. If you lose your Bitcoins, you are out of luck. Just search on number of bitcoin thefts that have occurred.

  • Bill___A

    I ticked the box to not allow overdrafts….

  • John McDonald

    the USA banks m be the dodgiest in the western world. They cause the huge global financial crisis in 2007 & instead of jailing hundreds of the scumbags, you jail one poor smuch, your very dodgy govt gives the banks a massive bailout, which in tern, leads to million dollar bonuses for these same scumbags. If that happened in Australia, there would be 1,000 of dead bankers & we have gun control, unlike the NRA run USA.

  • redragtopstl

    We’ve generally been able to avoid using the big banks (BoA, WF, etc.). Either we’ve used a locally- or regionally-owned bank, or a credit union.

    Presently, our checking account is at a bank based in SE MO, although they have several branches in the STL area (including one less than a mile from home). They’re always accomodating and personable to deal with; they know us by name when we go in. Yes, we have to do 12 debits/month to maintain the “free” account, but that’s no biggie. (The CU where we still have a token account now requires 24 debits/month, which is why I haven’t moved more money over there. That, and the fact that no financial institution pays diddly squat any more on “interest-bearing” checking. Time was, many of them paid 5%.)

  • beda

    Banks post debits instantaneously but take up to 5-7 business days (with holidays and weekends that can stretch to 10+ days) to post the credits. That is a free float of your money! Extreme examples a retailer cancels a debit transaction almost immediately (within a minute or two because of error in price or other reasons) when using a credit or debit card. While the debit immediately hits your account the credit at a minimum takes 5-7 business days and in some cases where the debit is posted as pending it may take even up to 30 days for the pending to disappear from the credit card. (Had this experience with CITI just last month!). The retailer will say he has never charged your card and has no obligation to make any credits and points the finger at the CC while CC points the finger in the other direction. Neither really cares the consumer caught in the middle by their underlying process – debit instantaneously and postpone credits as long as possible.

  • BubbaJoe123

    On the other hand, I’ve always gotten excellent service from all the banks I’ve dealt with (I current have accounts with both Chase and Citi), and gotten thousands in credit card rewards from them over time. It’s really all about (a) being a smart consumer, and (b) being a customer valuable enough for the bank to actually want you.

  • Carol Molloy

    While I certainly don’t expect much sympathy for banks, this article borders on the hysterical. Wells Fargo’s recent scandalous behavior aside, most of the financial crises alluded to in this article were created or abetted by investment banks, including the 1929 market collapse. And I don’t mean to condemn all investment banks, either.

    I particularly object to the statement that personal bankers are lying about overdraft protection programs. It is far more likely that their training is deficient.

    Personally, I am not in favor of the manner in which basic banking services are advertised. Free should mean free. Providing these services has a cost, so the criteria to avoid maintenance fees should be explained more prominently.

    Further to overdraft posting: Yes, processing order has a potential impact on fees charged to account holders. To say there is no regulation is misleading. While the precise order is not currently regulated, the CFPB has been wielding their considerable power to force institutions into posting orders that favor account holders. The CFPB uses their power to invoke UDAAP, and force change or levy huge fines.

    Additionally, posting transactions is a complex business. I realize no o s wants a tutorial here on this, so the bottom line is that it remains a complex business, made more so by the variety of electronic payment options in use today. Perhaps that seems counter intuitive, and perhaps we all wish to believe it was different, but the reality is that it is complex and not always obvious when a transaction will be posted.

    Debits and credits are applied when received, with th exception being that not all check deposits receive immediate availability. There is still float in the payment system, although the Fed is significantly increasing efforts to minimize it. Float is the interval that allows a bank to protect itself against returned items, not to invest your money as long as possible before giving it to you.

    The have known unethical bankers in my career. They have been a tiny minority. The unethical ones should, and do not always, receive appropriate punishment. The harm they can inflict can spread widely. However, like most relationships, if you approach your banker with a chip on your shoulder, expecting to be tipped off, how good do you expect service to be? Good service is a two way street, as has been emphasized repeatedly in this column.

  • James
  • joycexyz

    I agree with you, and no doubt we’ll both be bashed by the hysterical commenters above. Unfortunately, a few rotten apples taint everyone. As in every transaction, be it banking or commerce, the customer/consumer needs to be educated and aware. I would love to see schools offer a course in consumerism, but that would probably be viewed as anti-business.

  • Tim Mengelkoch

    Join a credit union

  • BubbaJoe123

    Stop using debit cards. Use a credit card, and have the float work for you, rather than against you.

  • Mel65

    I worked for our credit union during college and it absolutely is not procedure for CUs. In the first place CUs are prohibited from being the for profit machines that banks are so no need to artifically generate those fees. Also every CU i know of processes transactions in real time until closing if in person, as opposed to banks which end their business day at 230 and we processed deposits received first, or at midnight if electronically received. CUs do NOT operate like banks.

  • Carol Molloy

    This article has irked to the point of submitting a second comment. I find it lacking in balanced perspective or helpfulness for consumers. Mr, Mahany’s statements about how banks make decisions in the 1900’s versus today are bizarre and highly misleading, bordering on fanciful.

    Banking has become a highly complex business, with even formally simple products and transactions weighted down with difficult and sometimes contradictory regulation. The level of cost that the industry has born in implementing Dodd-Frank has been staggering. These are for profit companies, so shareholders will absolutely be expecting not to absorb the full consequences of these costs.

    Dodd -Frank regulations have not always been consumer friendly. The Durbin Ammendment, which resulted in interchange fee caps, resulted in no measurable benefits being shared with consumers by business, despite that being a basis in which the regulation was sold. The vanishing “free checking” in part is directly attributable to this Ammendment.

    This site regularly scolds consumers who don’t put forth the effort to become educated consumers of travel products. Why should the expectations be any lower when it comes to personal financial products? There are numerous sources of valuable independent information and education, from organizations and individuals who don’t have an axe to grind with banks. The Consumer Finance Protection Bureau is one such source. So is any Federal Reserve website, Fannie Mae, Freddie Mac and numerous community organizations. Bankets are required by law to provide substantial disclosures about the products they off whenever you actually open an account, apply for credit, or you may simply request the disclosures to study. Yes, they may be lengthy and complex, thanks to the incredible complexity of the regulations behind the disclosures. The point is, there are various means but which one can educate oneself,leading to better understanding and better decisions.

  • RightNow9435

    24 debits/month??? How can one even do that many without some “manufactured spending”

  • Harvey-6-3.5

    Lots of businesses have complex issues, so that isn’t much of an excuse for banks (SpaceX lands rockets).

    The problem is that poor and unbanked people pay the most in fees, because they lack the funds to maintain minimum balances. I don’t know their financial education status, but I suspect it is lower than the wealthy. So while I pay nothing to my big bank in fees, many with much less, pay more. That seems unfair, somehow.

  • Carol Molloy

    Harvey, I am not trying to excuse banks, just pouring out that some things that people think should be simple, are actually complex. And I absolutely agree that many businesses share that characteristic. I will say though, after 40 years in the banking industry, it has become significantly more complex, particularly with Dodd-Frank.

    I also share your views about the disproportionate costs that low/lower income people face for financial services. That segment of society must be served effectively. I view it as a moral obligation we have.

    What annoyed me about this article were two things: one, the constant reference to people lying; two, the lack of helpful suggestions for ensuring you understand banking products and make good choices. Simply trashing an entire industry and all the people that work in it hardly helps consumers make informed, wise choices.

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