Bank Issues in Italy

Recently in the news, there was a reporter asking random people on the street how much they spend on their a bank account. The reporter is reporting that supposedly Italians are paying around €252 a year while the world median is €108. They also compare with other European countries: France €99, Sweden €80, the UK €64, and Holland €34. They also state that the president of the Association of Italian Banks claims the Italian median is actually €65 a year excluding taxes.

I don't know where those people are banking but I can use Unicredit as an example. Since I'm between 18 and 30 years old, I can have what they call a Genius "Free" account. It's not free, in fact, I pay a monthly fee of €3.50. For those over 30, the fee is €8 per month. They make you think that's all you're going to spend for their service (they may have more information in the small print, but who has time for that when you're opening an account and have to put your signature on various forms 15 times? Even 3 times on the same side of one form!). So, later on when my quarterly statement arrived in the mail, I found out there's a quarterly tax of €8.55 (I don't know how much for the over 30yr account). Furthermore, keep in mind that none of their accounts accrue interest as they expect you to invest in stocks and mutual funds. Also, I believe this account is one of the least expensive on the market. They'll give you a Bancomat (ATM card) and you'll have to pull some teeth for a normal credit card (which is another crazy autographing experience). It's amazing that debit cards still don't exist here.

Now, let me compare that bank with my American bank accounts. Bank of America offers accounts where the monthly fee is waived either for having Direct Deposit (your pay from your job wired to your account), a certain minimum account balance, or even just having your mortgage with them. Otherwise the fee is as low as $7 (€5.73) a month. US Bank offers several truly free checking accounts with no minimum balance requirements. Both of these banks will give you an ATM card and a Debit (check) card. So, don't even think I spend €76 ($93) on each of my bank accounts!

For the Italians, let me explain what a Debit card (or Check card) is. It works like a bancomat but it's not. It looks like a credit card but it's not. It's a card that you can use anywhere the symbol Mastercard or Visa is accepted (even online) and the money comes straight out of your account the same month (possibly even the same day). For example, I used to go to the gas station and pay using my check card. Then I could, literally, go home, log into my Online banking, and see the amount withdrawn from my account.

For everybody else, let me explain what a Bancomat is. It's like an ATM card but there's one difference. A lot of stores have a device that will allow you to pay using your Bancomat. However, this card is not accepted everywhere even if the card says Maestro (Mastercard) or Visa (these cards don't have the hologram like a credit card or debit card). It's only accepted where there's a Bancomat symbol and they don't work online.

Finally, why do I think Italian banks cost more? A difference of mentality on doing business. Since the US is based on the idea of free enterprise, companies must and are allowed to be competitive. The banking market is so competitive that after years of lowering their monthly fees, they had to introduce free accounts. They'd rather have you as a client of one of their free accounts so that you'd go to them for credit cards and loans rather than not have you as a client at all. While Italy still has their socialist government keeping competitiveness under their fist, companies are over-regulated and restricted from becoming competitive. Therefore, in this environment, banks worry less about lowering their fees because not many banks are doing it.

at 7:30 PM
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