“USURY” is defined in Webster’s Dictionary as (1) “The act or practice of lending money at a rate of interest that is excessive or unlawfully high” or (2) “an excessive or unlawfully high rate or amount of interest”.
Like Noah Webster, I always thought that usury was unlawful and therefore fell into the realm of being criminal activity. However, recent actions taken by local commercial banks seem to be at variance with this view.
Reports in the local news media during the last two weeks have quoted officials from several banks indicating that the interest rate on savings will now vary between 0.15 per cent and 0.05 per cent.
This means that a customer who makes a deposit of $10 000 can expect to receive anywhere between $15 and $5 at the end of the year, 365 days.
Now if this customer, having made his deposit on Day 1, decides, for whatever reason, on Day 2 that he wants his money back, the bank will now charge him a fee of 0.5 per cent or $50.
On the face of it, the customer is out of pocket between $35 and $45, but is this really true? Not at all, because he would have had to wait for one year to elapse before he received any interest from the bank, so he really lost
$50 for having deposited his money in the bank.
Do not forget, however, that this is all about rates.
Let us assume that the bank did pay interest for the one day that it was in possession of the customer’s money. He would have received between $0.0411 and $0.0136.
The $50 which he would have been required to pay on withdrawal equates to between 121 654.50 per cent and 367 647.05 per cent of what he would have received as interest for one day.
Does this not amount to a modern legalisation of usury? Surely there must be something wrong with a system which allows such blatant robbery of our citizens.
Commercial banks have now become a mere replacement for the old mattress, and a poor (pardon the pun) one
at that.
The main difference between the bank and the mattress is that if the bank goes up in flames, we should still be able to recover our money. If this could be said
of the mattress, I am sure that many banks would be facing a rather uncertain future.
– ROLLINS HOWARD