Mid-day, that meant spending some time with Mom. We went grocery shopping, and to lunch, because that's what we do on Tuesdays. We also went by the bank, because we needed to have a conversation there.
Mom and Dad have always kept their day-to-day accounts in the same bank. It was, for years and years First Virginia Bank. Then First Virginia was absorbed by BB&T, which was in turn fused with SunTrust to create Truist. The larger the bank became, the more "efficiencies" and "consolidation" led them to close branch after branch, until the nearby branch where my folks did business for decades was sloughed off. There's another a few miles further away, and while not as convenient, it's fine.
When Dad died last year, we kept Mom's checking account, and closed Dads', folding that money into a money market account. There wasn't a point in her having two checking accounts, and getting some interest on that money seemed the prudent thing to do. Truist was offering a four percent "introductory" yield on their money market, so we put the money there.
That lasted a couple of months, at which point the rate dropped to just under two percent. Not great, but not nothing for a liquid asset, and an introductory rate is what it is.
Last month, as I reviewed Mom's finances, I noted that Truist had lowered that rate again, this time to 0.01 percent. Zero point zero one. Or rather, it had "been adjusted, at our discretion, to our standard rate."
This isn't an interest rate. It's functionally nothing. Given market conditions and money market yields at other institutions, it is, to use the technical financial term, total garbage. You offer an interest bearing account, then fail to provide anything other than illusory interest. It's all part of their terms and conditions, of course, which makes clear that Truist can lower your rate to the minimum floor for any reason at all.
Anything significantly under two percent right now is noncompetitive and substandard, and that interest was providing Mom with a week-worth of groceries every month. Given that Mom hates to deal with that stuff...we trundled off to talk with a human about it.
The bank branch manager was pleasant enough, and helpful. A few quick taps on his keyboard, and the rate was changed back to two percent. I asked, directly: "Why would you randomly apply a substandard rate?" He gave a clearly rehearsed song and dance about needing to pay staff, to which I said, "So, what you're saying is, it's about profit maximization?" He assented that this was the case.
I then asked if the rate would be dropped again. He said it probably would...there are Truist algorithms that do that for them automatically...but that it could be corrected at any time, and we just need to check our monthly reports diligently.
He then suggested that, if we had other assets we could move into that account, we could guarantee that it didn't ever change, because if we were premium customers we would be immune to ever being adjusted to the "standard rate."
"At what level would that be the case?" I asked.
At $250,000, he said.
We thanked him for his time, and we left.
So, to sum up: Truist, one of the ten largest banks in the country, will randomly penalize customers with less than $250,000 in total assets in order to maximize their profits. Those customers will be provided with a level of service and return that is both substandard and fundamentally unpredictable. And sure, you get an out if you're "premium." But as only 10% of American households have $250,000 in total assets, that means that Truist has chosen to extract the most profit from the 90%, while favoring a small minority of wealthy individuals.
This was, in a single exchange, everything wrong with modern banking and globalized capitalism.
In reducing the incentive to save, and destroying the capacity of a significant supermajority of Americans to build generational wealth through savings, this sort of corporate policy sabotages a healthy society in the name of quarterly returns.
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