Photo: Bankrupting America
Your bank is not your friend. It’s taken an entire financial crisis to teach us this lesson but that national bank doesn’t care about you.If you bank with a neighbourhood bank or credit union and you know the name of your banker, and he or she knows your name, then that bank cares about you.
If your neighbourhood bank loans out money to businesses and individuals in the community and has made an concerted effort to be involved, they care about you. But the big banks? No way.
As new regulations reduce the ways banks can make money off you, they’re turning to sneakier ways to get their profits back up to where they were before the crisis. Here are just a handful of ways that banks are showing that they love you for just your money.
Your bank charges you checking account fees. Years ago, banks were happy to simply hold onto your money and not pay you interest. Instead of earning a meager interest rate on your savings in a savings account, you received nothing in a checking account but you could access your funds with a debit card, ATM, or personal checks. Nowadays, it seems like the banks are searching for places to make money and are instituting checking account fees. It isn’t enough that you aren’t earning interest, banks are now looking to start charging or increasing what they charge for a checking account if you don’t have a minimum balance.
Wells Fargo’s Value Checking Account charges you $7 per month ($9 if you get paper statements) if you don’t have a minimum daily balance of $1500 and you don’t have a qualifying direct deposit of at least $500. Bank of America’s MyAccess Checking will charge you $12 a month if you don’t maintain an average balance of $1500 and you don’t have one direct deposit of at least $250.
Your bank charges you to use your debit card. Late last year, there was news that Bank of America was going to start charging customers to use their debit cards. The fee was going to be $5 a month for checking accounts with a debit card and customers, with great reason, revolted. Bank of America was not alone, plenty of other banks were considering these types of swipe fees. The unfortunate part is that the banks make money whenever you use your debit card but new regulation was going to limit how much they would earn in the future, so banks were looking for ways to juice up revenues. Enter this fee. It has since been aborted by Bank of America and many others but that doesn’t mean your bank won’t try it.
Your bank is increasing ATM fees. While you should try to avoid using an ATM that isn’t run by your bank, sometimes you can’t avoid it. Banks know this. In Bankrate’s 2011 Checking Survey, they found that the average fees that banks charge customers was around $1.41. How much does your bank charge you? Bank of America and Citibank both charge $2, which is slightly over the average.
Your bank is increasing overdraft fees. A few years ago, banks had the brilliant idea to start reordering transactions in order to “better serve their customers.” They would process the largest transactions first, under the pretense that it was better for the customer. In reality, this meant that if you were going to overdraft your account, processing the largest transactions first would maximise the number of times you would overdraft and thus increase their profits. In the end, you’re still responsible for not overdrafting your account but reordering transactions to maximise their fee revenue is deceptive and the banks knew it. That’s why so many have settled. Bank of America settled for $410 million. Plenty of others have settled since, including Citizens Bank, Fifth Third, and National City.
Your bank is increasing service fees for everything else. Another way that banks are trying to increase profits is by increasing the fees on the other services they offer, like stop transfers, bond redemption, wire transfers, cashiers checks, and similar services. Since fewer people use those services on a regular basis, we generally don’t have a good idea of how much those things costs and are unaware when those prices increase. Do you know how much a wire transfer will cost you? Probably not, how often have you ever needed a wire transfer? What about a bond redemption? Or getting a cashiers check? If your bank increased the fee they charge on those, chances are you wouldn’t know (I know I wouldn’t).
Those are just five of the ways banks are trying to sneak a dollar out of your bank pocket. If you’re sick of having to constantly watch your back about new fees, consider a credit union, here’s how to find one.