Money Matters: Bank Fees

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The world of banking is changing before our eyes.  If you bank with one of the big boys you have probably received a disclosure recently outlining the upcoming changes to the fee schedule.  You might be thinking they are at it again… always trying to figure out a way to get my money.  What is really happening here?

Recent legislature has changed the way that banks make money.  There was a period when Non-Sufficient Funds (NSF) fees made up a large chunk of the overall income banks received.  Many folks ended up paying $40 for a cup of coffee.  With the changes came the requirement for banks to give customers the opportunity to opt out of overdraft courtesy.  In most cases you already had the ability to do it.  Banks just didn’t advertise it.

As a result, banks had to start looking for ways to make money elsewhere.  There was a time when free checking did not exist at every bank.  This is a case of history repeating.  Banks must now begin charging a monthly service fee for accounts to make up some of the gap caused by the shortfall in NSF fee income.  However, in most cases you can avoid fees by meeting one of their requirements.  These include things like direct deposit, using online banking or bill pay service, and maintaining a minimum average balance.

Why are they doing it?  It’s a business.  When checking was free everywhere many households had accounts at several banks.  With the tightening of the purse strings, banks need to encourage you to hold your relationship with them.  By becoming your only bank for checking, they secure their pole position for your lending, saving, and retirement needs, as well.

Should you be outraged?  Probably not.  True enough… banks make plenty of money (we won’t even jump into the bail out), but consider this… they are still providing a service to us.  Whether we like it or not, we have allowed ourselves to become a society that relies on the financial service industry to handle our daily finances.  If you put your belongings into a storage facility you would pay a fee to have your things protected and have access to them as you wish.  It’s a little dumbed down, but you get the idea.

What you should be outraged about is not getting value for what you pay… whether it is at the storage facility or a bank.  There are too many options these days to not get top notch service.  Be very clear… banks are dying for your business right now.  Demand (nicely) to be treated like a valued client and not an account number… no matter how much or little you have.

But wait!  There’s more…

New legislation is changing the game again.  Now banks will be crippled even further by new laws which dramatically slash the amount they are able to make through debit card purchases.  You can expect changes soon.  Some banks have already begun to charge for things which had once been free and many reward programs have been halted.

So what can you do?

  • Act now.  Open every piece of mail you get from your bank and read it… really.
  • Review your accounts and determine if it is time to consolidate banks.
  • Understand how opting in and opting out affects you and make an informed decision.
  • Visit a personal banker at your local branch.  Ask for straight talk and information.
  • Watch your account closely for fees.  If the account receives a fee due to any of these policy changes, request a refund.  Most banks will oblige unless you are a repeat offender.