# Is the US banking system "backward"? **URL:** \ **Category:** Miscellaneous and Personal Stuff I Must Share\ **Created:** [April 3, 2025, 4:41pm UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579 "2025-04-03T16:41:34Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![hibernicus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hibernicus/32/2802_2.png) [@hibernicus](https://boards.straightdope.com/u/hibernicus)\ **Post date:** [April 3, 2025, 10:39pm UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579/41 "2025-04-03T22:39:11Z")
> [@RitterSport](#): > > That’s fine for a utility company that, hopefully, has a secure system. But how does the craftsman stop me from pulling money instead of giving him money. Ah, I see the issue now. I am not familiar with the process for a payee to set up a direct debit and what evidence the bank requires that I (as the payer) have authorised it. But I do know it is very much in the interest of the bank to make sure that I have in fact authorised it, because they will be at a loss if they do not. So if I told the bank that Joe Plumber had authorised me to take regular payments from his account, I imagine that the bank would raise an eyebrow and demand very convincing evidence of such authorisation. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [April 3, 2025, 10:52pm UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579/42 "2025-04-03T22:52:09Z")
> [@LSLGuy](#): > > Now this is all shifting as we speak. All the above is still true, but now in addition customers pay an annual fee to obtain a card. Actually, only a small number of credit cards require an annual fee. Some are substantial, like $500 for one of the premium travel credit cards, but there are benefits that may make that worthwhile for a frequent traveler. ---
**Author:** ![FinsToTheLeft](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/finstotheleft/32/2930_2.png) [@FinsToTheLeft](https://boards.straightdope.com/u/FinsToTheLeft)\ **Post date:** [April 3, 2025, 11:22pm UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579/43 "2025-04-03T23:22:35Z")
> [@Dewey\_Finn](#): > > Some are substantial, like $500 for one of the premium travel credit cards, but there are benefits that may make that worthwhile for a frequent traveler. My most expensive card is my CAD$599 Amex Aeroplan Reserve Card. Not only do I accumulate points faster, it gives me lounge access, free baggage, priority boarding, and great insurance. It also gives me a buy one/get one companion pass on Air Canada which is worth between $400-5000 depending on how you use it. ---
**Author:** ![Mighty\_Mouse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mighty_mouse/32/7776_2.png) [@Mighty\_Mouse](https://boards.straightdope.com/u/Mighty_Mouse)\ **Post date:** [April 4, 2025, 11:05pm UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579/44 "2025-04-04T23:05:34Z")
I have dealt with dozens of young people (23-28 years old from other countries and they have almost all never SEEN a check in their lives. Unfortunately one of the first things they have to upon landing stateside is open a US back account and get paper checks. Because before they can move from their hotel to a furnished apartment they have to pay the landlord by check. ---
**Author:** ![TokyoBayer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tokyobayer/32/13989_2.png) [@TokyoBayer](https://boards.straightdope.com/u/TokyoBayer)\ **Post date:** [April 5, 2025, 4:25am UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579/45 "2025-04-05T04:25:08Z")
> [@RitterSport](#): > > That’s fine for a utility company that, hopefully, has a secure system. But how does the craftsman stop me from pulling money instead of giving him money. I don’t know for other countries, but in both Japan and Taiwan, normal bank transfers are set up so that they are pushed and not pulled. Setting up automatic withdrawls requires that the account holder provide authorization to the bank. We do that for our children’s tuition, for example. We summit a form which allows the school to withdraw tuition monthly. (I know we have to submit something to the school but I forgot if we have to submit something else to the bank.) There isn’t a way for me to pull money from the craftsman’s account, even knowing what their account number is. Pulling money isn’t an option for most accounts. Bank transfers can be done at an ATM or online. You enter the recipient’s information, the amount and authorize the transfer. There isn’t method available to pull money. Because there are autopayment systems in place, obviously there must be a way to do that, but it requires steps not available to the average user, and it requires authorization from the account holders they are taking the money from. Our school can’t simply pull money from the craftsman’s account, even if I give them the account number and name. ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [April 5, 2025, 4:40am UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579/46 "2025-04-05T04:40:12Z")
> [@LSLGuy](#): > > Change the law so your US-based bank is strictly liable for 100% of that stuff and very quickly it will cease to be a problem. Yes. For example: > [@LSLGuy](#): > > Further, in the USA specifically, the consumer / customer fraud protections are vastly better for credit cards than for debit cards. For a debit card, a screwed up or fraudulent transaction can utterly f-up all your monthly finances. For a credit card that is effectively impossible. For credit cards, the customer is liable up to a maximum of $50, which banks typically waive because they have the proper systems set up. That law was passed by a Democratic congress during the 1970s in response to rampant credit fraud connected with - check it out - _companies sending you a credit card in the mail without you asking_. The credit card banks stopped doing that when they became liable for entirely anticipatable criminal exploitation. We could do the same with debit cards. We don’t, and no bank will simply guarantee their customers equal protections to their credit card customers. Doesn’t happen. > [@LSLGuy](#): > > The other thing is the banks are banking on many consumers spending more than they can afford. If you pay all your charges every month, there is no interest. But if you don’t, either because you’re a disorganized dingbat or you bought more than you can afford, then they charge the customer an insane rate of interest and fees. Month after month after month. The CC companies are really pushers selling highly addictive credit and hoping like hell you get hooked. _That’s_ where their big money is; the fees are noise. Yup. As a side effect there is massive cross-subsidization among credit card customers. Those rewards points, cash-back credits, and zero annual fees are siphoned from interest paying customers, as well as from merchants facing sharply higher percentage fees than found in other high income countries. ---
**Author:** ![TokyoBayer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tokyobayer/32/13989_2.png) [@TokyoBayer](https://boards.straightdope.com/u/TokyoBayer)\ **Post date:** [April 5, 2025, 7:06am UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579/47 "2025-04-05T07:06:58Z")
> [@TokyoBayer](#): > > (I know we have to submit something to the school but I forgot if we have to submit something else to the bank.) I don’t remember if we submitted something directly to the bank, but at a minimum, the authorization form we signed goes from our school to our bank. The bank doesn’t take the pulling account holder’s word for authorization. For bank transfers done at an ATM, the person needs to have the physical card as well as the PIN, so similar to the security for cash withdrawls. For online transfers, security depends on the bank. We have one bank set up to send an authorization code to my wife’s cell phone when we want to transfer money. I can see why people could be confused about the security of having bank information public. Looking online, [this is a warning](https://www.sofi.com/learn/content/what-can-someone-do-with-your-bank-account-and-routing-number/#:~:text=Your%20bank%20account%20number%20alone%20is%20not%20enough%20for,withdraw%20money%20from%20your%20account.&text=Scammers%20can%20use%20your%20bank,activities%2C%20and%20create%20fraudulent%20checks.) for the US: > [@](#): > > ## What Happens If Someone Has Your Bank Account and Routing Number? > > The short answer: Real damage. > [@](#): > > ### ACH Fraud > > With both those precious numbers, crooks could commit fraudulent [automated clearing house](https://www.sofi.com/learn/content/what-is-ach/) (or ACH) transfers and payments. You’re probably used to seeing those ACH letters on your banking details when you set up automatic monthly payments and the like. When a scammer has your bank account and routing numbers, they could set up bill payments for services you’re not using or transfer money out of your bank account. This isn’t the case in Japan, even when people have your bank information. There isn’t an easy way for people to transfer money out of your account. ---
**Author:** ![bob\_2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bob_2/32/3341_2.png) [@bob\_2](https://boards.straightdope.com/u/bob_2)\ **Post date:** [April 5, 2025, 8:55am UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579/48 "2025-04-05T08:55:38Z")
I use my credit card (or the app on my phone) for all purchases. Anything I pay for tomorrow, will not be charged to me until 31st May as my account day is the 6th of the month. This gives me free credit and, more importantly, the ability to control my outgoings. Of course, I make sure to clear the account every month and this happens automatically as long as there is sufficient credit in my current account. My credit card is not free. The bank offers a number of benefits like travel insurance etc at various prices. I pay £3 a month to get access to a savings account that pays a higher interest rate. This £3 is refunded because I pay more than some minimum amount into my current account each month. Credit cards have more protection that debit cards here, even if only part of a transaction is on a CC the bank will pursue a vendor if there is a problem. Debit card transactions are as unprotected as cash payments. I once sent some money to my student daughter, but accidentally sent it to her landlady, who had the same name. The only way to resolve it was to politely ask the landlady to give it to my daughter. From what I read on this board and elsewhere, the US banking system is pretty backward compared to the rest of the world. ---
**Author:** ![Ms2001](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ms2001/32/18463_2.png) [@Ms2001](https://boards.straightdope.com/u/Ms2001)\ **Post date:** [April 5, 2025, 9:37am UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579/49 "2025-04-05T09:37:02Z")
> [@Mighty\_Mouse](#): > > Because before they can move from their hotel to a furnished apartment they have to pay the landlord by check. They could go to the post office and get a money order instead, right? ---
**Author:** ![PatrickLondon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/patricklondon/32/4422_2.png) [@PatrickLondon](https://boards.straightdope.com/u/PatrickLondon)\ **Post date:** [April 5, 2025, 10:22am UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579/50 "2025-04-05T10:22:42Z")
nm, duplicated ---
**Author:** ![Mighty\_Mouse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mighty_mouse/32/7776_2.png) [@Mighty\_Mouse](https://boards.straightdope.com/u/Mighty_Mouse)\ **Post date:** [April 5, 2025, 10:50am UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579/51 "2025-04-05T10:50:46Z")
They need a US bank account anyway for direct deposit. ---
**Author:** ![Eyebrows\_0f\_Doom](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/eyebrows_0f_doom/32/3119_2.png) [@Eyebrows\_0f\_Doom](https://boards.straightdope.com/u/Eyebrows_0f_Doom)\ **Post date:** [April 5, 2025, 2:38pm UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579/52 "2025-04-05T14:38:43Z")
> [@bob\_2](#): > > From what I read on this board and elsewhere, the US banking system is pretty backward compared to the rest of the world. I guess the way some people use it, but I’m in the US and my experiences matches yours 100%. I pay for everything with my credit cards and pay the balance in full every month online. ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [April 5, 2025, 2:45pm UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579/53 "2025-04-05T14:45:55Z")
I agree, as far as that goes. The US banking system viewed as a whole both internally from an industry insider POV and externally from the consumer POV is backwards, fragmented, and very, very disparate. For those of us (like you and I) who use large modern banks and mostly deal with large modern vendors, and live in large modern cities, the shiny UI they’ve grafted over the top of their wheezing steampunk innards makes it all work plenty well enough for us. Speaking just for myself, I have no complaints; _everything_ is point & click simple for me. In those immortal words of somebody: > The future is here. It’s just (very) unevenly distributed. ---
**Author:** ![pulykamell](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pulykamell/32/3166_2.png) [@pulykamell](https://boards.straightdope.com/u/pulykamell)\ **Post date:** [April 5, 2025, 3:08pm UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579/54 "2025-04-05T15:08:14Z")
> [@LSLGuy](#): > > The other thing is the banks are banking on many consumers spending more than they can afford. If you pay all your charges every month, there is no interest. A friend of mine is a credit counsellor and he says that there are those in the credit industry who cynically/sarcastically refer to those customers who always pay off their balance as “deadbeats,” as they don’t make money directly from them. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [April 5, 2025, 3:19pm UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579/55 "2025-04-05T15:19:22Z")
> [@doreen](#): > > > [@Mops](#): > > > > I can have my bank reverse direct debits (a) for debits from parties that I have authorised, within 8 weeks, (b) for debits from parties that I have not authorised, within 13 months. > > How does the bank know if you authorized it or not? Do you just say you didn’t authorize it after the fact ? You tell them. Someone one fraudulently took like $40 k out of one of our bank accounts. We reported it to the bank and within 10 business days we were made whole. ---
**Author:** ![Tripler](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tripler/32/21807_2.png) [@Tripler](https://boards.straightdope.com/u/Tripler)\ **Post date:** [April 5, 2025, 3:30pm UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579/56 "2025-04-05T15:30:29Z")
@LSLGuy and pretty much everyone else, I’ve been reading this and’ll be fine tuning a few things I do w/“Tripler-nomics.” Thank you guys for the advice-through-discussion. Tripler -Eliminating “luck” from finances starting . . . _ **now** _. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [April 5, 2025, 3:38pm UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579/57 "2025-04-05T15:38:41Z")
> [@LSLGuy](#): > > The other thing is the banks are banking on many consumers spending more than they can afford. If you pay all your charges every month, there is no interest. I suppose that’s true below a certain level of income. With my bank (a large one) as long as I have above a certain balance, I don’t pay any annual fees, I don’t pay any ATM fees, regardless of whose ATM I use, and I have free overdraft protection. So presumably they make money the interest they charge other people for loans while keeping my money as part of their fractional reserve. > [@LSLGuy](#): > > I agree, as far as that goes. > > The US banking system viewed as a whole both internally from an industry insider POV and externally from the consumer POV is backwards, fragmented, and very, very disparate. > > For those of us (like you and I) who use large modern banks and mostly deal with large modern vendors, and live in large modern cities, the shiny UI they’ve grafted over the top of their wheezing steampunk innards makes it all work plenty well enough for us. Speaking just for myself, I have no complaints; _everything_ is point & click simple for me. I prefer the term “Excelpunk” as the entire banking industry seems to be run off of Excel spreadsheets and Powerpoint decks created by VPs and Managing Directors presenting the results of those Excel spreadsheets to each other. In a thread I created last year describing how shitty my job was, that “job” was doing some consulting for a “data governance” group in a global bank that kept getting fined by the Federal government. Basically what I did was cobble together a bunch of reports and data extracts from various (presumably mainframe-based) project tracking systems to create a centralized Excel spreadsheet of the 1500 or so regulatory projects the bank was working on that the group “owned”. I thought they were just going to use it as an initial reference for whatever came next, but then that Excel spreadsheet became a sort of “data warehouse” that they would manually update each month. Someone then linked that spreadsheet to a Powerpoint deck and each month they reported on it to some senior executives. I’m doing something similar on my new project at a different bank, but at least it has to do with implementing a new product at the bank. Point is, I have no idea what these back-office banking morons actually “do” other than collect “status updates” and pass them up the chain. I haven’t seen anything like planning or any real decision making. Forget AI. Most of these jobs could be replaced with some basic project management software IMHO ---
**Author:** ![OttoDaFe](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ottodafe/32/356_2.png) [@OttoDaFe](https://boards.straightdope.com/u/OttoDaFe)\ **Post date:** [April 5, 2025, 3:50pm UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579/58 "2025-04-05T15:50:48Z")
> [@pulykamell](#): > > … there are those in the credit industry who cynically/sarcastically refer to those customers who always pay off their balance as “deadbeats,” as they don’t make money directly from them. I brought this up in a thread a long time ago, and was immediately taken to task by several posters who said nonononononono, that’s never been true. We’ll see how well it flies this time. — OdF, certified deadbeat ---
**Author:** ![vbob](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/vbob/32/4439_2.png) [@vbob](https://boards.straightdope.com/u/vbob)\ **Post date:** [April 5, 2025, 4:04pm UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579/59 "2025-04-05T16:04:28Z")
> [@Railer13](#): > > Not much different than handing out your bank routing number and your checking account number for debit transactions Or handing someone a paper check, which has all that info printed on it… ---
**Author:** ![Mops](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mops/32/16494_2.png) [@Mops](https://boards.straightdope.com/u/Mops)\ **Post date:** [April 5, 2025, 4:43pm UTC](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579/60 "2025-04-05T16:43:29Z")
One thing that looks very much strange in the US banking industry, to me as a customer of the German banking industry is the handling of overdrafts. I read often at the Dope of checks bouncing because there was not enough of a balance. As a customer in good standing with my bank (which I became just a few months after opening my account, which my employer pays my monthly wages to), I have an overdraft limit of 2 times my monthly net wage. That’s only meant for short term debt though, as my overdraft interest rate is 9.55 % while I can get an unsecured loan for \< 8 % and a mortgage for \< 4 %. Generally you have an overdraft limit of that order of magnitude at the current account where your monthly wages are paid to, while other current accounts have a much smaller or no margin for an overdraft. Credit cards, on the other hand, are almost invariably considered as payment vehicles not debt vehicles. Their monthly balance is debited to the current account. Some credit cards offer debiting only a defined proportion of the balance but that’s an unethical practice aimed at people with little financial knowledge - If I chose that option with my Amazon-branded Visa card I’d pay ~18 %/year on the balance not paid off, as opposed to the much lower rates for bank debt mentioned above. [Previous page](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579.md?page=2) [Next page](https://boards.straightdope.com/t/is-the-us-banking-system-backward/1016579.md?page=4)