Banks are run by con-men. Instead of giving their clients an honest service, they insist on ridiculous terms and conditions, making it look like they’re doing you a favour. So why not stuff that paper in a mattress back at home?
If you pay someone to keep your money safe, then that’s exactly what you should expect. If that person decides to use that money to make more, then maybe you too are entitled to some of the profits. The funny thing is, it’s never that simple. Banks won’t just give you a fraction of the money they make. They’ll force you to meet a set of standards first.
To paint a clearer picture, banks don’t actually make losses. They just make less money than they did during their previous financial period. Unless there is some sort of cataclysmic economic meltdown or some extremely poor investment models, a bank will continue to make profits, be they great or small. This means that banks can afford to give loans because they know that the returns outweigh the risks. But what about a mattress account? Can you trust yourself to keep that money safe and secure?
Pros and Cons of a Mattress Account
No Limits
With a mattress account, you can take out as much as you want. No one will judge you or put a cap on your daily expenses. The entire pool is yours and you can even swim in it if you so desire. Best of all, you can take out a “loan” and pay it back whenever you fell like. In essence, you are the bank itself. No one dictates your terms and conditions but you.
No Monthly Charges
No one can hassle you about monthly charges with a mattress account. Even if you are renting your place of residence, the account is actually free. A bank would charge you the moment you hand them your money.
VIP Treatment
With a mattress account, you don’t have to wait in line to use the facilities. You get served first because you are the only account holder. No one will ever make you fill in an endless list of forms for any service tendered. What’s more, you are the sole beneficiary. You decide what kind of treatment you get.
This idea may seem ideal but it does have its cons.
Security Risks
There is the ever-present risk of rats and other vermin eating your precious paper. Fire is also a possibility unless your mattress is made of flame retardant material. Theft is possibly the biggest threat to your bank because you have no insurance.
To make matters worse, being the bank manager, you may lack the discipline to keep you financial affairs in check. You stand the risk of liquidating all your assets in one clean sweep.
Accessibility
One of the best things about a mattress account is that you know exactly where you money is. As long as you have a job and are at home on a daily basis, you will have access to it at least two times a day. However, problems will definitely arise when you need that money and you are too far away from the only source of withdrawal. To make matters worse not all employers pay in cash. There will be cases where a bank account is a mandatory part of getting a salary. If that’s the case, you can always withdraw everything at the end of every payment period and take it home with you to your “customer friendly” account.
Pros and Cons of a Bank Account
Security
The one thing a bank does well is keep your money safe. Even if it is robbed, there are safeguards and insurance policies to protect the interests of both the bank and its clients. However, there are a number of things that could really grind an account holder’s gears.
Limited Withdrawals
One of the things that frustrate clients is a bank’s withdrawal limits. The fact that they keep a cap on how much money you can take out makes you feel like it’s not even your money. There could be a KES 50,000 emergency and some banks will only let you withdraw KES 30,000. How is someone expected to do anything of value if they have to jump through hoops to access their hard-earned capital?
Low Returns and Monthly Charges
Two other things that make banks seem less appealing are their low returns and their monthly charges. Even if you have enough money stockpiled in their facilities, their profit margins are low. What are you supposed to do with that measly 4% at the end of the year? Look at it this way; if you kept KES 1 million in the bank and left it untouched for 365 days, these buggers would only give you KES 40,000.
Meanwhile, the bank has increased that money through withdrawal charges, mortgages, forex exchange, interest rates on loans and checking fees.
They make so much more than the account holders put in. For all you know they could be tripling your cash and giving you the scraps from their success.
Even if they do all the heavy lifting themselves, why not give you 25% of your savings as a sign of gratitude at the end of the year? Surely they can afford to do this at least once a year? If numbers are anything to go by then banks have been taking their clients for a ride.
Take a look at this: According to the Central Bank, the sector’s balance sheet grew 4.5% to KES 2.3 trillion in September 2012 from KES 2.2 trillion in June 2012.
The sector’s gross loans and advances rose 2.3% to KES 1.32 trillion in September from KES 1.29 trillion in June 2012.
And this is further up from KES 1.2 trillion in March 2012’s loans and advances which jumped from KES 1.19 trillion in December 2011. These guys just keep making money.
It’s not that hard to believe that some clients who like to leave their money untouched, hoping to make some profit at the end of every financial year. Others prefer to keep making withdrawals, causing their profit margin to diminish with every transaction.
Little do they know that, when it comes to bank accounts, you can’t just let it sit there. Monthly charges eat into your balance. If there is a fixed charge of KES 200 per month and an interest rate of 4%, then that money is taking two steps forward and one step back.
Minimum Balance
Some people may argue that nothing is more frustrating than a bank account with a minimum balance large enough to make a difference. Imagine a balance of KES 1,500. To an individual earning a hundred times the balance, it’s nothing but pocket change. To more than half the country’s population, it can be rent, a decent meal, fare for a month or a brand new shirt, a trouser and a pair of socks. Isn’t it cruel enough that these people are holding your money hostage? Why do they feel the need to tell you that there is some money in the account that you will never be able to access?
Invest That Money
All things considered, you’re better off having the money working for you.
There are probably hundreds of songs about cursed missed opportunities. When it comes to banks, you’ll wish you had put that money in something more rewarding. There are many ways through which you can make money in a safe and secure business environment.
From unit trusts to mutual funds to bonds and treasury bills, opportunities are just waiting to be exploited. There are even ninety-day investments that offer returns of up to and beyond 8% of the initial investment. Why put your money in the bank when you can get so much more from treasury bills?