The question is now well established. And there is a lot of talk about it, but nothing changes, unfortunately. Keeping money on your checking account doesn’t pay. We have said this many times. But why? Here are the many reasons why not to keep money in the checking account.
Repetita iuvant, the Latins said. But evidently the Italians, one of the least financially cultured peoples in the Western world (data fromOECD speak clearly about it), if they have forgotten it. How they forgot Latin. Notoriously, the inhabitants of the Bel Paese have always been a nation of savers. One might wonder why. In a society such as today, oriented towards services and consumption, a nation that does not consume does not grow. And in fact, the Italian growth in the last 20 years has simply not occurred. This thing has been certified by both the IMF and the ECB rather recently.
So what do Italians do? They save. But they don’t spend. And they don’t invest, above all. And they let inflation eat up their money in their checking account. They don’t even have the perception and culture of capitalizing on cash on a deposit account. Or in short-term inflation-linked government bonds. Like the American TIPS. Among other things in hard currency and safe haven assets, such as the dollar. Not at all. The homegrown money vegetates on current accounts. Unproductive.
Here are the many reasons why not to keep money in the checking account
Dell’inflation and of its deleterious effect we have said many times, so we will not return. Instead, we are talking about a far from remote hypothesis. Raised in Germany by Commerzbank, the second largest credit institution in the country. That is to pass on to customers the negative costs that the ECB puts on the banks. Which at the moment are -0.4%. This would mean that this amount would be charged to account holders by the banks. Will it be enough to ensure that Italians put their savings to good use, were it to come to this? We are ready to bet no, unfortunately.
Let’s continue. It is a fact that interest on current accounts no longer exists. But the exponential increase in their costs is a novelty of the last period. Obviously because the banks, with zero or negative interest rates, no longer know where to earn. And since investing is risky, even if potentially very profitable, there is only one resource left. The oxen park of the ignorant (in the Latin sense of the term) account holders. Which can be borne at any cost. So they don’t protest, in almost all cases.
The expenses therefore increase. The reasons? Technological updates that need to be watched for, such as contactless cards. And the bank crashes, which have enormous costs, of which the general public is not aware. For example, the payments that healthy institutions must make to replenish the FITD. Costs? An average family spends € 145 per year on managing their accounts. And with the stamp duty for stocks exceeding 5,000 euros, you reach almost 180 euros per year. Here are the many reasons why not to keep money in the checking account. Invest. Wisely, but invest.
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