Sad to say, the latter has become an integral part of any transaction imaginable.
Whether you get paid for freelancing or for reporting to your day job, your earnings eventually end up in your bank account.
Even PayPal funds are not exempt. To note, one of the primary reasons that you want to verify your PayPal account is not only to lift the spending limit but also to allow you to move your PayPal funds to your ATM or bank account.
Financial Suicide
The sense of necessity and the false assurance of security that comes when experts hold your money for you make the banking institution the necessary evil that it is. Other than these, entrusting your entire earnings with the bank is financial suicide:
- When you think of it, the bank gets to use your money for free but will charge exorbitant rates to individuals who want to make a loan (out of the money you just deposited). Not fair.
- Penalties are everywhere: from average daily maintaining balances to dormancy fees and annual service charges, and God knows what. You're always on the tiptoe, because the bank is ready to cash in on the slightest misstep you take.
- Each time you move money, the bank slaps you with charges and fees of all sorts. There's no such thing as a free lunch, but can you imagine having to pay the bank a huge cut of your check deposit or incoming remittance from abroad? Even the oh-so-convenient online banking system is ruthless in this respect.
- Most banks will still ask you to pay up for inter-branch money transfers initiated online. For instance, from one BPI account to another, 150 pesos (for peso transfers) or 6.50 US dollars (for foreign currency transfers) from the receiving party will be withheld by the bank as service fee deduction.
- Use the "wrong" ATM, and you get charged for every transaction you enter with the machine - be it in the form of a balance inquiry, an electronic fund transfer or a withdrawal. The average deduction ranges from 10 to 12 pesos per transaction type. This does not include other fees for international card holders and sundry.
- Have your card "eaten" by the ATM machine, and get ready to shell out 100 to 150 pesos for a replacement card. Some banks follow a strict schedule for claiming the card and will destroy all unclaimed cards by the third day. You are at the bank's entire mercy.
- When the bank files for bankruptcy and folds up, you're the last to know. You might not even know unless you read the headlines and until media will make a ruckus out of the event. As most depositors attest, getting your money back from the insurance company PDIC will be a long and tedious wait. Imagine having to wait for years to get your money back. Draining.
Local Fund Transfers from ODesk - Hyped
In April this year, ODesk stepped up with a workaround: the local fund transfer (LFT). For freelancers signed up with ODesk, doing direct bank transfers may turn out to be pocket-friendlier than taking the ODesk-to PayPal-to your bank account route. The bidding site lowered the withdrawal fee from 1.99 dollars to 99 cents, and your first withdrawal comes free.
News has it that ODesk to PayPal to bank fund transfers normally incur a minimum charge of 1.99 dollars, excluding the exchange rate by the third-party vendor and bank fees for remittance (zero actually from PayPal to EON). With the LFT, you are able to cut off PayPal (and its exchange rates and fees) as the intermediary. Your two worries would boil down to:
- revealing your bank account information, which is risky when it reaches the wrong eyes
- dealing with your local bank's inbound remittance fees
So, as you can see, the LFT eliminates only the middleman. In exchange, you would need divulge to the site your bank account details. The LFT option does little to resolve the freelancers' issue with the bank and its outrageous incoming remittance fees. To note, the following incoming remittance charges were reported by ODesk freelancers at a local forum:
- Banco De Oro (BDO): 200 pesos
- China Bank: 200 pesos
- Land Bank: 50 pesos
- Metrobank: 77 pesos
- Philippine National Bank (PNB): 250 pesos
- Rizal Commercial Banking Corporation (RCBC): 100 pesos
- Unionbank: 50 pesos
Yes, you read it right. The bank expects you to pay every time you put money to your account. The fees are no different actually when you transfer funds from PayPal to your bank. The only exception appears to be Bank of the Philippine Islands (BPI) which does not charge any incoming fee for local fund transfers. This privilege can only be enjoyed under the umbrella of ODesk. Under normal circumstances, the bank is notorious for its steep 150-peso incoming remittance fee.
Things to Remember
- If you're using PayPal, the only bank which collects no remittance charge is Unionbank.
- If you're doing local fund transfers from ODesk, the best choice would be BPI.
- Don't let all of your money sleep in the bank.
- To move your freelance earnings, choose the lesser of two evils.
- Always research your options before transacting business.
Note: The photo of this piggy kitty of a bank comes from People's Daily Online. To view more photos of the adorably fat feline, check out the February 17, 2006 story. The feline is unnamed. What is known is that the super fat cat belongs to a Chinese man named Xu Jirong. *
