Tuesday, November 30, 2010

Occam's Checking Account.

Occam's Razor is often expressed in Latin as the lex parsimoniae (translating to the law of parsimony, law of economy or law of succinctness). The principle is popularly summarized as "the simplest explanation is more likely the correct one".
I do almost all my banking on the Internet. Aside from a stray institution that "needs" a paper billing statement returned to them, I write almost no checks.
Like everything else, there is good and bad to that. Most of the bad lies in the future, with the potential for Internet fraud. The good lies in the present.
One thing that is particularly frustrating - until you stop and think about it - is the transfer of money from one account to another.
When I pay a bill from my checking account, it takes between 2 and 5 days for the payment to reach the payee. That makes it necessary to do some actual financial planning, or else the bills will be late. It frustrated me until I figured out a viable alternative.
I now pay most of my bills on the company or credit card web site. The first of every month I sit down and go through all the sites of the various people I owe money to. If I put in a payment for the 4th, it will be paid on the 4th, even if the 4th is tomorrow. I wondered how that could work so much more easily than going through my bank, until I figured out the simple answer.
The people who want the money want to take it quicker than the people giving it up. I'd guess that banks make a grand amount of money during that "float period," between the time I submit the payment and it gets sent from my account. If the payees can get the money in less than 24 hours, why can't the banks pay bills in the same amount of time? Unless, of course, the bank gets paid to make us wait.
It was so simple, after all.

1 comment:

Cliff Yankovich said...

True dat. Float time for the banks.
Another fun thing is the 2-3 day delay credit card companies utilize in giving us retailers our money. The amount you charge hits your credit account seconds after I swipe the card - so why do I have to wait days for my money? Especially funny is that no money comes into my account over the week-ends. Oh yeah - computers only work Mon - Fri. And no holidays.
American Express is the worst, not only do they charge merchants TWICE what VISA/MC do, they sit on the money twice as long. I no longer accept AmEx or Discover at my store because of the higher fees and longer wait times. What a crock.