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Why This Jaw-Dropping Bank Move Is an Empty Threat

Recently, big banks like Bank of America (NYSE: BAC  ) , Wells Fargo (NYSE: WFC  ) , and JPMorgan Chase (NYSE: JPM  ) have gotten criticism for discussing potentially charging customers to keep deposits at their banks. Yet savers should realize that big banks are bluffing with a losing hand, as any suggestion of charging customers for deposits is an empty threat.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, examines why charging depositors to have bank accounts would backfire on the big banks. He notes that deposit rates are subject to supply and demand, and that even though B of A, Wells, and JPMorgan might not want excess deposits, other banks do -- and they're willing to pay for them. Pointing to higher rates from banks run by Sallie Mae (NASDAQ: SLM  ) and General Electric's (NYSE: GE  ) GE Capital, Dan figures that as long as other banks are willing to pay for deposits, customers' best move will be to vote with their feet if larger banks try to charge them for the privilege of banking with them.

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  • Report this Comment On November 29, 2013, at 10:44 PM, richbeachgoer wrote:

    I had a term of Deposite with Liberty. It was 69000 I had to break the term of the certificate of deposte because I wanted to buy a house. So Liberty charge me a certain amount which went into 200 dollars into my principal. But I have other certificates of deposites totaling 212,000 which the terms are up 12 months from now. I plan to take the 212,000 out of that bank when the term is up and never do business with that bank ever again. So they had my day when they went 200 dollars into my principal of my deposite but I will have my day 12 months from now by moving my 212,000 some wheres also when then term is up

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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4/17/2014 11:23 AM
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