I noticed many houses for sale in my area. I began to think why so many people were trying to sell their homes. I know hurricane insurance plays a big part. So do the banks. This started my train of thought regarding banks.

I know every dollar deposited in a bank is reported to the feds. Each bank gets daily interest on the total amount of monies that have been deposited. This interest percentage will roughly equal the interest percentage paid on money market accounts, etc., so - in fact - any interest paid to customers by banks is not their money but the money they are credited from the federal govt.

Prime interest rates mean nothing. Technically it is the interest banks' pay, but since they rarely pay anything, prime interest is for the consumer only. The monies reported to the feds are credited to the banks 'account'. When a bank lends out money, that amount is deducted from their 'account'. They are not paying anything for using the money in their account. So, banks are making pure profit on the interest paid to them from mortgages, etc.

Sometimes banks overindulge in lending out money. That is why there is the FDIC. Each account in a member bank is insured by the federal government for up to One Hundred Thousand Dollars. This has been in place for many years. Savings and Loan companies were not members. That is why there was the Savings and Loan fiasco a few years ago where so many people lost all their money.

Credit Cards is the other money maker for banks. Credit cards are the Damocles sword banks hold over consumers. Credit means more than cash flow in this society. If someone is so far in debt they have to declare bankruptcy, that person still has to pay off their credit card debt. (A law passed a few years ago thanks to the bank lobbyists.)

Everyone and their brother are offered credit cards. Transfer amounts from other credit cards and no interest will be charged for two months. After that, the average percentage charged is 12.9% - if you are lucky. My dog, Bubba, recently received mail offering him a credit card. I did not bother reading it to him as he has not learned, as yet, to sign his name.

I receive, on the average, two or three offers for another credit card each week. I learned, a very long time ago, not to use credit cards unless I had the cash to pay for purchases when the bill comes in.

This might present a problem to me, as the banks are now allowed to charge a fee to anyone that pays off credit cards and does not pay any interest to the banks. The fees charged by credit card companies and banks create more revenue for them than the interest paid on the cards.

Banks love the holidays. The majority of people use their credit cards to by presents for the holidays and because it is plastic and not hard cash, people have a tendency to over indulge. They also have to pay the interest on those cards until approximately the end of April. During that period of time, people will still tend to charge purchases - such as gas, etc., on their cards. This will bring the interest they are paying through approximately June.

I used the same bank for ten years. They were 'merged' (bought out) by another bank which then 'merged' with a much larger bank. I noticed the philosophy of this new national bank is much different that what I was use to. This bank has no idea of the area which I live, or any unique problems of this area. Even though I know all the tellers, I am an account number to the bank, not a person.

I will stay with this new bank for one reason and one reason only. I have good 'credit' with them, as I have never bounced a check. Since our society now depends on credit reports, I will use this to my advantage.

My advice - keep a small balance on credit cards. The interest paid on these small amounts will be less than that fees charged for the bank not making interest. Two dollars and some change interest is less than (approximately) the twenty-five dollar fee that will be charged if the card is paid off.

Athena_Louise