Things that I have learned that are contrary to popular belief:
- Contrary to popular belief, the leading cause of ageing is not ageing. It is, in fact, the sun. So use sunblock.
- Contrary to popular belief, most of the money in the world is not money. It is credit. (Although I say this one a lot).
- Contrary to popular belief, these facts from wikipedia. In particular: the somewhat disappointing news that migrating lemmings do not engage in mass suicide off cliffs. This was apparently a figment of Disney’s imagination. And when you watch the scenes of lemmings leaping to their demise in the Disney documentary White Wilderness (here’s the link), you are actually watching the photographers throwing them off the edge.
At this point, I should be honest and say that I have forgotten why I wanted to start this post with things that run contrary to popular belief. There was a thought process – but then I got distracted by the lemmings story, and a youtube video about Disney’s 5 Darkest Secrets (disappointing).
But I think it went something along the lines of:
Contrary to popular belief, prestige banking is not about better service. It’s about better branding.
People don’t get black credit cards (or whatever) for the service – they get black credit cards for the pleasure of whipping the card out in front of people that aren’t “eligible”.
Perhaps that sounds cynical.
But consider this:
- Banks charge higher fees for these cards.
- If you’re willing to charge higher fees for the card, then you’re clearly capable of recovering the costs for these extra services.
- Why then make people below a certain annual income “ineligible”?
- Surely this should be a question of: “If you’d like these services, then you must pay these higher fees”?
On the basis of “extra services”, the discrimination simply does not make sense. Even if you say “Oh – but larger clients make for higher bank transaction revenue!” – you’d still be left asking yourself “But then why are the account fees more expensive?”
It only makes sense if you add in some ego-stroke.
It makes even more sense when you consider that exceptions are made to that annual income rule for “young professionals”. Being all those article clerks and medical students who are being groomed for future snobbery.
So what you’ll get when you step into the Private Banking realm:
- Higher fees (although not for cash withdrawals – which makes sense, given that the wealthier individuals do most things by plastic anyway).
- Access to airport lounges – if you haven’t already got that with your normal cheque card (although you still have to pay to access the international lounges – I know this from experience)
- A Private Banker (who you’ll call occasionally when you need them for something – only for them ask you to come in and do your finger-printing in person at the branch).
- You’ll earn rewards faster (maybe – if you suddenly spend more because you’ve got a Private Bank card).
- The joy of flashing an elite card at a table of your plebbish lackeys (who are just aspirational enough to know that you’re quite a big shot if you’ve got that particular card).
Is it worth it?
That depends on how much time you spend in an airport.
But even that is a questionable side-benefit – because if you’re that frequent a flyer, then you’re probably already entitled to a lounge benefit through your loyalty program of choice. And once you’re in that class of traveller, you go to a different lounge where you’re not surrounded by all the “young professional” riff-raff who are attempting to recover their higher bank charges through free gin.
But hey. That said, there is nothing wrong with wanting to flaunt a bit of success.
I’ve just found that most of my young professional brethren got disillusioned very quickly. Usually when they realised that even Private Banking clients can get their mortgage applications turned down.
Because that’s when the bank puts their cards down on the table. And as it turns out, clients don’t really get the upper hand.
We’re just lemmings.
Rolling Alpha posts opinions on finance, economics, and the corporate life in general. Follow me on Twitter @RollingAlpha, and on Facebook at www.facebook.com/rollingalpha.