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Back in 2011 I wrote a post asking Why Are You Still Using Big Banks?. In that post I was talking about all these new fees that banks were getting ready to charge for checking and savings accounts, as well as jacking up fees on credit cards.

Bank Building
Creative Commons License Mark Gstohl via Compfight

What I meant to ask back then is the question I’m finally asking today; can we trust big banks to do things not to hurt us?

Seems that answer is no, as today 5 major banks came clean and admitted that they tried to game the system by trying to manipulate foreign currencies and interest rates. This occurred from 2007 through 2012; in clearer terms, this was during the lead up to a major recession, the bailing out of some of these banks, bonuses paid to supposed banking geniuses, some CEOs being accused of fraud and questions about CEO compensation.

Who are the banks that have plead guilty and will be paying upwards of $5 billion in penalties? The first four, Citigroup, JPMorgan Chase (these 2 I’ve picked on in the past), Barclays and the Royal Bank of Scotland have plead guilty to antitrust violations because they colluded with each other to increase their profits while everyone else was competing against them, unaware of what was going on. Collusion means they went behind the backs of regulators and came up with a scheme that would be beneficial to them, which is against the law.

The fifth bank is someone called UBS, a name I didn’t recognize, who plead guilty to trying to influence the interbank rate in London, which indirectly affected U.S. currency prices. They’re also paying the lowest penalty, around $500 million.

All of this comes on the heels of Deutsche Bank’s admission of guilt in April of wire fraud for manipulating benchmark interest rates, which is the lowest interest rate level banks can get away with for certain types of treasury securities investors might want to put their money into. They ended up having to pay a $2.5 billion dollar fine; I wonder how much that hurt them.

Here’s the thing. These are only some of the things major banks are owning up to lately. Back in 2010 Wells Fargo was accused of unfair minority mortgage practices. They also lost a lawsuit where they were charged with overcharging fees for overdraft accounts illegally.

Many other banks, when challenged by justice departments across the country about multiple foreclosures that came about because of their own sneaky mortgage practices, the speed at which they snapped up those properties, their collusion with assessment companies that were robo-signing paperwork that wasn’t ever being reviewed, eventually led to banks forgiving billions of dollars in home loans to get the government to go away.

I only have one dealing with a major bank. It’s for my home loan, and that’s because they purchased it from a smaller local bank my wife and I originally got the loan through. Otherwise I deal with a smaller regional banking system, one without the ability to even think about manipulating rates of any kind.

For my bank, having to pay a billion dollar penalty to the federal government would actually mean something. For the large banks above… another day at the office.

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As you know, things like clothes and cars come in different categories of quality. With close, you can go anywhere from something costing just under $10 to something costing as much as a couple hundred thousand dollars. Cars can go anywhere from $2500 up to $1 million.

Creative Commons License Darien Law via Compfight

There are some people who believe that you pay for quality and that the more something costs the better quality is. That’s both true and false at the same time, and we’re going to explore that in this article.

Let’s take a look at clothes. It’s easy to say there is no doubt that a $20 pullover shirt is better quality than a shirt that cost $3.99. It’s probably true as well.

You would probably watch both shirts the same way, but a less expensive shirt will probably shrink quicker and have its colors fade quicker. At $3.99 you could probably buy five shirts that would last as long as one $20 shirt, which might make it more economical. But if you’re not in the mood to be bothered in that way that you would go with the shirt that’s a better quality.

So what happens when you take a $40 dress shirt and compare it with a $500 dress shirt? On the surface you might believe that the $500 dress shirt would be more durable because it’s obviously of better quality.

In this case it’s not true. Whereas you can take a $40 dress shirt and put it in a home washing machine, a $500 dress shirt needs to go to the cleaners. It will last a long time because dry cleaning shirts is a less intrusive method of cleaning.

However, if you take your $40 dress shirt to the dry cleaners it will last just as long. The only difference between the two shirts is the materials they’re made of, with the $500 shirt probably feeling a bit more comfortable. However, most people would probably never notice the difference.

Citroën CX Cabriolet Orphée 1983
Thomas Bersy via Compfight

Now let’s take a look at cars. Once again, you might believe that a car that cost $50,000 is of better quality than a car that cost $5000. Without equivocation you’re probably on the right track here. However, as with shirts there are some differences.

A $50,000 car is going to have a lot more luxury features inside the car, as well as a much better engine. The ride will be smoother, and acceleration much easier. As a matter of fact, everything inside and outside the car will be made of better quality materials, which means the car should last longer.

However, it turns out that’s not necessarily true. It turns out that cars with smaller engines are normally more energy-efficient. You get better gas mileage with a smaller car because it runs at a more consistent rate. Most people who buy smaller and less expensive cars don’t use them for long trips, but if they do they’ll get better gas mileage overall. If they don’t it means less stress on the engines.

Another thing to look at is potential damage to both cars. The more expensive the car, the more it costs in repairs to fix. Because of materials, it’s easier to make the exterior of a less expensive car look like new than it is for an expensive car. You might think that it’s harder to damage an expensive car but that turns out not to be true.

One other thing to look at is that there are fewer things that can go wrong under the hood of an inexpensive car than an expensive car. Once again this means that the cost of repairs will be higher on a more expensive car. Truthfully, as long as both vehicles maintain the proper time periods for things like oil changes and engine checks both cars will probably run for the same length of time. Quality gives you more comfort, but it’s not necessarily more economical in the long run.

These concepts are important to think about because so many people get caught up in thinking they need to buy the most expensive thing on the market to get the best quality without realizing that there needs might mean that they can afford less, and yet leave them with a better quality of life. No matter what you can afford, if you take care of it and use some common sense you can have quality at any price.

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Well, this was an unexpected event.

Last weekend my wife and I went to the Verizon store to get new smartphones. While we were waiting to be seen, we were approached by a couple of representatives talking about their Fios program, which offers phone, internet and phone. Most of the time I tell people I’m happy with my service, but this time I told them I’d listen to their offer.

Bart via Compfight

I have to admit, it sounds like a great offer when compared to what we have now with cable. However, I had one of my wife’s phrases running in the back of my mind: “Oh wait, there’s more.”

Sure enough, there was more. The upfront offer was spectacular. Now it was time for everything else. If we wanted DVR services it was either $14.99 a box or we could get the package where you can get 3 boxed for $30, which includes the $15 service that allows you to record on a main box but watch those programs on any TV’s that have a box.

Then there was the TV programs package, of which they had 4. My wife has one channel in particular that she almost exclusively watches. It turns out that package was on their 3rd highest tier, which of course means the price went up even more. Sure, it also means we get a lot of premium paid subscriptions channels like Showtime and Cinemax, channels we never really watched that much before. It also turned out that it didn’t cover the one channel I’m known to watch here and there, HBO. However, they threw in a 65% discount for 12 months; I couldn’t object much to that.

All still seemed like it would be fine, and we’d still be saving a pretty penny. And yet, “Oh wait, there’s more” was still in my mind. I knew something else was coming.

And it did, but this I wasn’t expecting. The lady then said that if we were interested in exploring it further they would have to do a credit check on us. That caught me off guard; a credit check to get a service?

I had to think about it. Not that I was worried about my credit but I was weighing whether this was all really worth it. I decided it was and gave them my home phone number, which is already associated with the company. Then they said that they had to check my wife’s credit instead because, even though my name is on the home phone, her name is on the wireless account and hers was the newer account.

That made no sense but my wife agreed, and we passed easily. It was still a bit irritating to have to do it, especially when initially they were getting ready to put it all under her name and she didn’t want that. However, smarter heads prevailed, not only because my name was on the main account but because we decided to add a second line.

In the end… this coming week we should have the service installed, and in the long run we’ll be saving about $100 a month from both the cable service and the phone we already have being rolled into this package, as it had gone up to just over $65 monthly from the $32 it was just 3 years ago; they blamed it on taxes.

One final thing. All of this stuff takes time to do; you might as well be buying a car on credit for as long as it takes. But I only had to sign one piece of paper; I guess that’s something…

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