Savings account should be free, and I’ll tell you how to get one at the end of this post. We are already getting very low savings interest rates. I feel that it is unfair to impose fees on savings account.

When we save our money with the bank, we are actually lending our money to the bank. The bank takes our money and lends it out as housing loans, overdrafts, etc. and makes alot of money via interest.

Imagine the bank earns 3% in mortgage interest, and then pays the savers 0.2% as savings interest. The bank makes 15 times more than the savers. Yes, the banks need to make more to cover its overheads. However, my point is the bank is using our money as working capital to earn even more money and so it is unfair to impose miscellaneous fees on savings accounts.

Today, I have closed my CIMB savings account. Thereby saving me RM8 ATM card fee a year. I have my Maybank savings account for many years now and I have never had to pay any fees on my savings account.

Can you imagine, if the amount of money in your savings account is small, and the interest you earn is little, then the annual RM8 ATM fee will wipe out all the savings interest you have earned in the whole year. And maybe your savings interest is not even enough to cover the ATM fee.

Many banks, when you ask to apply for a savings account, the customer service will recommend that you open XYZ savings account. However, these savings accounts come with all types of fees such as the popular annual ATM fee, and maybe penalties if your account is lower than the minimum balance. What you need to do is ask for “zero fee savings account”.

Here’s my personal experience. I went to HSBC to open a savings account. The customer service introduced a couple of savings accounts to me. But these come with fees. I told the customer service that I don’t want any fees. The customer service explained that all savings account now comes with at least the RM8 ATM annual fees. I insisted that I’d only open a savings account if there’s no fees. The customer service checked and rechecked her computer and finally showed me a savings account without any fees.

Remember, “the customer is always right” and the banks do have no fees savings accounts. It’s just that they don’t recommend these savings accounts outright because these accounts don’t make money for the banks.

Yesterday, I went to two banks to inquire about mortgage. I wanted to find out how much loan I am eligible for so I could budget for a property early next year.

Both the banks, in their computations, used 70% of my gross salary as the maximum repayment I could afford with the condition that I put up 20% of the property value as down payment. Could the banks be serious? If my gross salary is $1,000 then the bank would be willing to loan an amount whereby my monthly repayment will equal $700. This is insane.

The statutory retirement contribution is 11%. Tax is about 13%. This leaves me with about 76% take home pay. If my mortgage repayment is 70%, I will only be left with 6% to survive and pay my bills. Could people really live on only 6% of their gross pay? I suppose you could if your paycheck is enormous. However, I doubt the poor and middle class could.

The banks are encouraging people to spend beyond their means. No wonder the credit crunch has such a huge impact on the economy. Because people were spending and living on credit. Once the money supply (or credit) is cutoff, people have nothing to spend with.

We should not overstretch ourselves when buying properties. Else, we would be slaves to the bankers.

This is a follow up to my earlier post about Paypal stealing money during withdrawals, I criticized Paypal for automatically converting currencies at a high exchange rate. I sent at least three emails highlighting my dissatisfaction with this new “upgrade”.

There must have been more than just a handful of customers voicing out their dissastisfaction. Recently, I made two withdrawals and Paypal no longer converts these withdrawals to my local currency. This is good for me because my bank will convert these withdrawals at a cheaper exchange rate.

Paypal has recently implemented a new rule for withdrawing money. And this new rule is forced upon its customers. I could not find any new policy update announcement of this new ruling. They know this rule will be met with fierce objections, hence the reason the rule was implemented below the radar.

My primary currency in Paypal is USD. I’m from Malaysia, and I used to withdraw my Paypal funds to my credit card attached to my Paypal account. Last time, I would be able to withdraw in USD. My bank will then convert the USD to MYR at the prevailing market rate.

However, about one month ago when I made a withdrawal, I was forced to accept the withdrawal in MYR. Paypal will convert the money from USD to MYR at a very expensive rate. I lose more money when Paypal does the conversion compared to when my bank does the conversion.

Paypal converts my money from USD to MYR at a very expensive rate and forces me to accept this. There is no option to receive my money in USD.

I know Paypal wants to earn more profits. But certainly this is not the way. It is akin to stealing money from my pocket. Just because Paypal is a monopoly does not mean they can do whatever they want with their customers and take their money.

Paypal should instead let the customer choose during the withdrawal process whether he or she wants to receive the money in their primary currency or let Paypal convert to another currency.

I learned something new about my Paypal account today. My Paypal account default currency is USD. And I was able to accept GBP and keep the fund as GBP. I didn’t choose to convert the GBP to USD upon receiving the fund. I chose to keep the fund as GBP. Now I could pay for my items in GBP when shopping from UK retailers. This will save me some currency conversion charges.

I am also able to withdraw the GBP to my bank or credit card. The conversion rates used by these banks are better than the rates Paypal uses to convert the GBP to my local currency.

Paypal supports multi-currency account.