There’s an old saying about how to make a small fortune… start with a large one.
Of course, it is a joke, but there is some element of truth in that, especially if the large fortune you are using is someone else’s.
Many years ago, I opened an account with National Girobank, a British state-owned bank. It was the first British bank to offer telephone banking, free chequing accounts, and interest on current accounts. It was dead good, so it was inevitable that it would eventually be privatised. In 1990 it was bought by Alliance & Leicester.
I considered changing my bank then, on principle, but didn’t get round to it immediately, and A&L seemed to manage the bank well, and preserved the good stuff. So I stayed.
In 2010, A&L were bought by Santander, and things quickly went downhill, to the point I have been woken from my apathy sufficiently to do something about changing.
But back to that small fortune. As some of you know, we recently sold my late mum’s house, and a cheque went into my account on Friday Feb 3rd. I’ve been watching it for the last few days, waiting for it to clear, so I can put it somewhere that earns a useful amount of interest. It still hadn’t cleared today, 8 days later, so I phoned Santander to query it. I was told that because of the size of the cheque, it had to go through extended clearing, which will take, on average, 10 days.
So who do you think gets the interest on my money (and other people’s money) between it leaving the payer’s account, and ending in mine?
I’ll give you a hint – not me; as although the bank clearing system allows for the interest to be paid for the period it takes to clear, that is of no use if the payee’s account pays no interest, or – in my case – only pays interest on the first 2,000 pounds.
So that is how you make a small fortune – become a banker, and move people’s money around for them, hanging on to it for as long as you can.