Do you pay for the services your bank provides? Do you pay for the "privilege" to use your card, save money with them, or hold a portfolio of shares or bonds? Do you pay for transfering or withdrawing money? Ever wondered why a bank might charge fees for basic services?
All my life I had never even considered these questions to be relevant. Paying for an account was something unheard of, until I came to France and found a whole people finding it acceptable to pay huge sums of money to their banks to be "allowed" to bank with them. Have you ever wondered what banks actually do with your savings. While they pay you peanuts in interest, they are lending your money to others for a multiple of what they pay you in interest. They invest the money in properties, the stock market, and a number of other investment vehicles. So if they are earning money with the money you are lending to them, why do you pay them?
€ 315 his bank wanted to take from him and it seemed there was nothing that he was able to do. Maybe there was something he could do.
No banking fees
A few weeks ago I was conducting a training on negotiation techniques. My opening question:
“How many of you pay for their account?”
Everyone but one person raised their hands. When I asked why, the consensus was: “It’s just how it is.”
“But why don’t you just change banks?” I inquired.
“That is so much effort. I am really busy,” was a common answer.
“I understand. But how about re-negotiating a free account with your bank?”
Two of the predominant replies were:
“Can you do that?”
“They would never do that.”
So I told them about how I negotiated a free account that was originally offered for a hefty € 315.
A bank meeting: France versus UK
When I was offered a job in France I moved my things from the UK; a country were free bank accounts are standard. In France things are, however, very different and, may I say, old-fashioned regarding banking. Until a few years ago I knew many a people stuck with expensive accounts. None of them had ever even considered or heard of free banking. Banks to them seemed like a untouchable giant. To me, accustomed to free banking, there were nothing more than a service provider that is there to serve my needs, not vice versa. Thus, upon my arrival a clash between these two cultures was inevitable. Thus the story took its turn:
As I sat with the client advisor of a major bank, she listed all the benefits that I would be able to enjoy if I signed up with them. The only drawback I had to part with a substantial amount of cash. But that’s not what banks are there for, they already earn money with what you save and keep with them. They get to use the money you hold with them to invest it, lend it at a 10-20 multiple in interest to what they pay you, and its gives them stability when things are getting rough in the economy (having a bigger balance sheet is always a great weapon to protect yourself from macro-economic troubles or hostile takeovers).
“I have never paid for an account. I will certainly not pay € 315 for a bank account with you,” I clarified.
“But this is how much the account is.”
“Well, then make me an offer that is free.”
“There is no such thing in France. You will always have to pay for your account,” she insisted.
“I am from the UK and I have never, in my life, paid for an account.”
“But this is France and here you have to pay,” she attempted to educate me.
“I don’t have to do anything. You want my business and I am happy to bank with you; but I will not pay for an account.”
She looked at me slightly puzzled. I suppose she didn’t get that much resistance from a client every day. After gazing at me for a couple of seconds, she got up, “Please give me a second, I will check with my supervisor.”
“OK, we can do it for € 270,” she said moments later as she returned from her exchange with her manager.
“Thank you for asking your supervisor, but as I have said, I have never and will never pay for an account,” I emphasized my point.
“How much money do you earn? Do you have more than € 75,000 in assets and annual income?” she suddenly asked.
“Please take no offense,” I replied with a gentle voice, “but would you tell me how many assets you have?”
“No, of course not,” she said with a surprise on her face that someone would counter her question in such a manner.
“You see. And therefore I prefer not to answer your question.”
“Can you give me another minute,” she said before hoisting from her chair.
As she came back, just minutes later, she happily announced, “€ 160. That is what my supervisor is willing to offer.”
“Thank you very much for asking your supervisor again, but as I stated earlier, I am from the UK and will not part with a dime to have a bank account.”
As she walked out again for her penultimate talk with her supervisor, the lady sitting on my left, a relocation service hired by my French employer turned to me and said,
“Monsieur, you can’t do this. This is how things are here in France.”
“I am sorry,” I said, “but it matters not in the least to me. They want my business, I don’t need theirs. There are many other banks out there and I am happy to take my business elsewhere.”
She looked at me in disbelief as the door opened and the client advisor returned:
“We can do it for € 70 for you.”
As I extended my hand I slowly got up and sincerely thanked her for her efforts:
“I really appreciate the time you have taken to meet me, but I think I will prefer talk to another bank. But I thank you very much for inquiring with your supervisor for me.”
Getting a free bank account
As I stood, ready to leave, the client advisor called after me,
“Wait, bear with me. Let me talk to my supervisor again.”
Within a minute she returned with some good news,
“You can have the account for free.”
“Well, that is wonderful news,” I said with a confident smile on my face.
I returned to the chair and we sat down to sign the contract. But not only did I get one account for free, I opened two accounts with her bank.
You might wonder why it worked. Two reasons:
- They needed my business, I did not need theirs. They wanted me as a client, but I had many banks to choose from.
- I was 100% willing to walk out of the negotiation in a scenario when my expectations were not met. And that is exactly what I did. That power is immensely potent, as it indicates that you are the party that needs to be pampered to, not vice versa.
So why pay for your bank account? They already have your money that they use to prop up their profit. Stick to your guns and know what you are willing to give and what you are willing to accept.
It was a win-win situation for the bank and me: they received my business – my money – and I “saved” € 315.
Alternatively, just go with a bank that offers its services for free such as the example in Gems.