It just seems like a semi necessary thing to have to use a bank, why do they pay me a % to keep money there?
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I switched from my local credit union and their paltry .10% interest. Without going into detail, my wife and i have banked there for years with our life savings and have received pennies essentially. We got maybe $100 a year in dividends. They say the dividends are low because they have to maintain their branches, etc.
We are not the types to need a human to bank, so we switched to the online banking format and went with SoFi. We are now getting 4.5% on our savings and have made more in interest payments to us in a few months than we did many years at the credit union. We now see over $100 a month in dividends. The tradeoff to this is no locations to go to and a fee for depositing cash at a retailer, which is fine because we are cashless type couple. Less overhead for them should be more dividends to the customer.
Now as far as paying you. Thats how they keep your money coming in. It seems redundant for them to pay you, but there is a weird amount of people who don’t realize the banks take your money and invest it for themselves and are essentially in debt to you. I have come across many people, including my wifes grandma, who thinks the cash you deposit just sits in their vault waiting for you. When you make deposits in any way (cash, payroll, etc) you are loaning the bank money. They owe you at least what you have deposited. That money is gone before it touches their hands. … to keep your money rolling in, they need to give you an incentive to stay (dividends). You being a customer is how they make money. If they cannot give you an incentive, then they can lose your income to another institution (the competition)
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