Deposits provide huge bank profits

Big US commercial banks profited $171 billion off of the American public last year, according to data by startup banker Beam, which noted that the average American loses money on his or her deposited funds when inflation is figured in.

Beam describes itself as an innovative, high-interest, FDIC-insured mobile bank “on a mission to keep money in customers’ pockets by paying 200 times more than traditional bank accounts.”

It’s “an unspoken secret” that many banks make 4 percent to 5 percent on every $1 deposited, notes Beam.

That’s a difference of 500 percent. Nearly 70 percent of bank profits come from this “gap” between the interest they earn, and what they pay out to customers, according to Beam.

In a statement, Beam said it’s a common misconception that the Fed sets the retail bank customer’s interest rate.

“In reality, the bank decides how much you earn on your money, and the big banks have collectively decided that rate is .01 percent,” Beam said. “Meanwhile, they raise loan interest rates long before they increase deposit interest, all the while funding year-end perks, bonuses, extravagant lobbies and their bottom line.”

Then there is what banks call “non-interest related charges.” These overdraft fees can reach $40, while the average ATM fee is now at $4.57.

In 2016, the three largest banks — Wells Fargo, Citi and Chase — collected more than $6.4 billion in ATM fees, according to one study. That averages out to $25 for every adult American.