Posts Tagged ‘Consumer Spending’

Anonymous Banker: Consumers – It’s Time to Go Shopping

Monday, December 21st, 2009

If we are looking to see any meaningful improvement in overall employment in 2010,  we’ll need to boost our spending during this holiday season. 

Consider this:  Following the dismal sales results of the Christmas 2008 shopping season,  2.1 million people lost their jobs in the first quarter of 2009.   

While it’s true that unemployment dropped from 10.2% in October to 10% in November, these results are skewed.  First, there has been an increase in the number of people that are perceived as having “left the job force”, those that haven’t looked for work for the last four weeks.  Second, there was a rise in the number of folks that secured “temporary” employment, which typically always goes up during the Chrismas season.  

Wall Street will put their usual positive spin on increased sales that will be realized by some companies.  But it’s not hard for a Best Buy to pick up market share in the wake of Circuit City closing its doors.  So one won’t always be able to gauge the movement towards economic recovery by individual store results.   

And as we hear announcements comparing this season’s cumulative totals to last years, remember, it won’t be hard to show positive results over December 2008 numbers.   

Consumer confidence is at an all time low.  Yet consumer spending drives 70% of our economy.  Those still employed are worried about losing their jobs.  Many are worried about losing their homes.  Folks are dealing with increase in heating, water and electric costs, while gas prices continue to sneak up.  They’ve been battered by the banking industry’s unrelenting rise in their credit card rates and the slashing of their credit lines.  None of these things will encourage Christmas spending this season.

Still, in this season of giving, please remember that our holiday spending has the power to jump-start 2010.   We need to send a signal to business owners and managers that we are confident that better times are upon us and that we are confident in our nation’s ability to recover.  Consumer spending is the best way to send that message.  And it’s the only thing that will encourage the creation of new jobs early-on in 2010.

To those that are still feeling blessed in these challenging times, embrace the spirit of Christmas.  Buy a toy for the child of a neighbor that is unemployed.  Put together a basket of food and leave it at their doorstep.  For those of us that are less fortunate, donate some time to a local soup kitchen serving others.  If ever there was a time to do this, the time is now.

My heartfelt wishes to you all for a very Merry Christmas and blessings for the New Year.

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Anonymous Banker says please PIN your debit card purchases

Saturday, September 12th, 2009

I can’t even watch a golf match without getting pissed off at the banks.  Chase’s Sapphire card and their television commercials, run during the FedEx Golf  Tournament, are a perfect example of how the banking industry systematically screws over the small business owner.  This ad is Chase’s attempt at brainwashing the consumer into using their debit card in a way this is most costly to the business owner and most profitable to the bank.

First, Chase issues a “reward” debit card to every new consumer or business opening a checking account.  In fact, when you open a business or personal checking account with Chase, you can’t even “opt-out” of getting a  debit card because Chase’s computer system won’t let the banker open the account without issuing a rewards debit card.  This should be no surprise since Chase is one of the largest providers of merchant services to the business community.  And debit cards with reward points provide higher returns to the bank and higher costs to the business merchant that accepts the card.

Second,  Chase trains their consumer customers to use their debit card as a credit card.  Their mantra is “Don’t PIN the card”.  In fact, Chase Bank waives basic personal and business checking  monthly maintenance service fees if the account owner uses their debit card five times each month, but only if they don’t PIN the card.  Don’t PIN the card, don’t PIN the card, don’t pin the card….. says Chase Bank!

Chase has all types of rewards programs.  Some are free to the cardholder.  Upgrades can cost the consumer $25 to $65 a year.  And here are the terms, from the Chase website, defining how you earn your rewards:

 ”Qualifying purchases” include all Debit Card purchases made without using a Personal Identification Number (PIN).  “Non-PIN” purchases include purchases you sign for, Internet purchases, phone or mail-order purchases, small dollar purchases that don’t require a signature, bill payment (where billers process the transactions as a credit card), and contractless purchases (purchases made by holding your blink (sm) – enabled card to a secure reader.)  Purchases authorized with your PIN and ATM transactions do not earn points.  For a full description of Qualifying purchases, please see the program terms and conditions.

With all the different rewards programs and Merchant service rates, it’s hard to be precise.  But even estimating on the side of the bank, the consumer would have to spend at least $1875 to earn a $15 gift card.  Those same purchases generate merchant service costs to the small business owner of about $30 to $48.  The profit goes to the bank.

When you, the consumer, think about the rewards you get off your debit card (if you remember to actually cash in your rewards), consider this:  All those extra fees that are paid to the bank by the store owner are really paid by YOU in the form of higher prices.  You lose and the small business owner loses.  The only one that gains is the bank.

Consider the cost of prime time TV advertising and how costly this is to the bank.  And Chase Bank uses this air-time to brainwash the consumer into developing a habit specifically designed to screw over the small business owner.  Chase is trying to instill buying habits that are very costly to YOU.  If your purchase is more than $15, then please, PIN THE CARD!!!  Perhaps then, Chase won’t run these ads while I’m trying to relax and watch a good golf match and I can forget, for that brief span of time, just how despicable the banking industry really is.

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