When your Bank is More than a Bank


Traditional banks are just a bank.  You put your money into their bank. If you withdraw more money than you have in your account by either writing a check or using a debit card, the bank bounces the payment and charges you a fee.  Sometimes when trying to figure out when payments will go through, it feels like one is playing casino games rather than doing banking. The check to your landlord gets to the bank first, but since the bank owns your credit card, the bank takes out the credit card payment first.

The more “mistakes” a customer makes, the happier the bank is because the bank is making money on your mistakes.

It is not your grandfather’s bank – simple.com

Some banks have chosen to throw away that old “let’s screw the customer as much as we can, so we can make a lot of money on fees” model and have decided to create a model that truly serves the individual customer.

Money managemnet

With a Simple.com bank account, your banking and your budgeting are rolled into one product.  

In a traditional bank account, if you check our balance online or through their app, they will tell you how much money is your bank account at that specific moment in time.

If you have $1050 in the bank, and you want to spend $75 for groceries, a traditional bank will say, “Sure no problem.” and let you buy the groceries.  Then when the rent payment goes through, the rent payment bounces. This is because a traditional bank does not know that you have already written a check for $1000 to your landlord to pay for next month’s rent, even if your landlord has not yet deposited the rent check.

With Simple.com, when you check the available balance you already put into your budget that your rent every month is $1000.  The simple.com app will tell you, “No, you cannot spend $75 on groceries, because after you pay your $1000 rent payment (which has not yet gone through), you only have $50 left in your bank account.  Sorry, but your favorite Entenmann dessert and the gallon of chocolate chip ice cream are not on the menu.”  Okay, I am exaggerating a little bit on the Simple.com feedback, but you get the idea.

It might be frustrating that Simple.com will not let you spend $75 on groceries, even though it is physically in your account at that specific moment in time.  You really wanted that chocolate chip ice cream. But the benefit is that your landlord is not going to evict you for not paying your rent.

As Simple.com describes their services

“Safe to spend is a more accurate reflection of an available balance that represents your in the moment cash flow, account for future bills, and budgets.  It’s a smart budgeting tool that does the ‘can I afford this?’ math for you, so you’re better prepared to make smart financial decisions on the spot.”

“Safe to spend is your total available balance minus your goals and any scheduled activities that will be withdrawn from your account in the next 30 days.”  

“To calculate safe-to-spend, we take your account balance, subtract the amount you have earmarked for recurring bills and financial goals, and tell you exactly how much money you have left over to spend on whatever you want.”  Can we say a few safe fun casino games, anyone?

Example

“Say it’s payday, and you just want to know how much money you have leftover after paying bills and setting aside some of your savings goals.  Safe-to-spend updates in real-time. No more manual spreadsheet budgets or calculations scribbled on napkins. Just a pretty cool online budgeting tool built right into your account.”

Reality Check

When I was single, I used to bank like this using Quicken on my PC connected to my bank account.  When it was just me spending money from my bank account, it was a very easy, straightforward way to keep my finances in check.  But once I got married, and more than one person was grabbing money out of the account at the same time, the Quicken method on the PC went right out the window.

Traditional methods that may work in a single person account, don’t work as well in a joint account.  At least that is my personal experience.

Summary

I wish my current bank provided services like this because this is what banking for the individual consumer should be.  There are third-party applications that can help. Quicken is one that comes to mind. But it does not compare with a bank whose banking principals revolve around helping the customer to NOT get into financial trouble, rather than doing everything possible to get a customer to overdraft their account, so the bank can money on fees and interest.

Plus, when more than one person is taking money out of an account at the same time (husband and wife), it makes more sense for the budgeting tool to be directly connected to the bank account.

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