Quote:
Originally Posted by mrreality68
Remember they have motivation to have you leave your money in your account with them.
The Loans they give other people ( and charge interest on)
And
Similar to a bank they float money. So the money you keep in your account helps keep them more liquid and use those funds to help fund the loans.
This way they minimize their funds required and meet all their customers needs
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Jeff,
I don't think that is really true because first off, they're not a bank. Banks have unbelievably strict federal and state rules and requirements they must adhere to and abide by to do what they do. And I doubt they have anything like that in place without it being public knowledge.
Plus, by doing what you're saying it would put them at extreme risk if they suddenly had a lot of customers want their money back. Banks, at least federally licensed ones, can normally get short term loans from the Federal Reserve Bank to cover such cash needs/shortfalls. That option isn't available to them. Now they do have the possibility of obtaining loans through a credit line or other credit facility they may have with their own bank, but that is probably going to require such loans to be collateralized. And trust me. no U.S. bank is ever going to consider funds they're holding for their customers/consigners that they themselves don't own or have any legal right to as acceptable collateral for making a loan to them.
I think the holding of funds is more along the same idea they take advantage of with the vault. Someone holding something in their vault will likely just consign it back to them to sell should they ever decide to sell it. It is easier and convenient for the seller/consigner as they don't really have to do anything. And the same kind of goes for them just holding the cash for someone they just sold something for. Now if that same seller/consigner who's money PWCC is holding sees something that PWCC is selling for someone else and buys it, they can just tell PWCC to pay for their purchase with the funds they'd been holding for them. Can have various reasons people would choose to do this. The simple ease of doing it (laziness), the fact that someone likes the idea of keeping all their card collectiing activity and financing of it separate from their other finances and activities (similar to how many people keep separate investment/retirement accounts), or how about so the spouse doesn't know about it, and so on. In any event, I think they may do this to try and keep people spending their money in their auctions/sales. PWCC gets their main income from sales commissions, and the vault and holding people's funds for them can help to keep consignments and customers flowing to their site and sales, and away from Ebay and other AHs/online sellers. No factual hard evedence, but I think it does make the most logical sense as to why they may be doing it.