Photo: Flickr / Borya
While some dread the idea of growing older, others are excited about the idea of ageing — gracefully so — and look forward to the rewards they will receive upon reaching retirement age.There’s no doubt that whether you’re taking advantage of senior discounts at restaurants, or enjoying a low-cost movie, being a senior citizen has its financial perks.
But recent reports show that these perks aren’t always offered from banks. In fact, a recent study has found that senior checking accounts may not be beneficial at all. What is it about these accounts that have seniors saying Nay?
Elderly Short-Changed With Senior Checking Accounts
Most senior checking accounts are not providing the same benefits seniors receive when taking part in other senior-based programs. In fact, a report released in August by the Pew Charitable Trusts reveals that many elderly customers are forced to pay more for comparable accounts.
In the report, Still Risky: An Update on the Safety and Transparency of Checking Accounts, the Pew Safe Checking in the Electronic Age Project took a look at checking accounts offered by the 12 largest U.S. banks and 12 largest credit unions.
Of the financial institutions in the study, five of them (four banks and one credit union) offered special checking accounts that were tailored for seniors. Simple senior checking accounts were found to be very similar to basic checking accounts at these institutions. But in some cases, seniors were actually being charged more for their senior-specific checking features.
According to the study, one of the biggest charges came from monthly checking account fees. The average basic checking account charged $12 per month when anywhere from $0 to $1,500 was maintained in a checking account. On the other hand, a senior checking account charged $25 per month for maintaining this amount in their account.
In fact, it took a balance of $5,000 for seniors to avoid paying a monthly service fees in most senior accounts. The dollar amount to avoid a monthly fee in the basic accounts? $1,500. That’s quite a difference.
AARP Education and Outreach Senior Project Manager, Sally Hurme, recommends that seniors seek out the best offers before opening a senior checking account.
“Wise consumers should shop around and compare senior accounts,” says Hurme. “Make sure your package is better than the one down the street.”
You may be wondering where exactly the perks are for seniors who acquire a senior checking account. Special features like earning interest on their accounts, as well as waivers of other fees are what entice seniors into taking on this type of checking account. But if seniors don’t take advantage of these perks, they are simply left with the responsibility of maintaining up to $5,000 in their accounts to avoid fees.
Best Ways to Access Senior Discounts
So if senior discounts are nearly impossible to find from banks, even from accounts labelled senior checking accounts, how can you get good deals on senior checking?
The key may actually be to focus less on senior checking, and instead look at the benefits offered from each checking account offered by your bank, since there may be other types of accounts available that meet your checking needs.
For instance, if you are thinking about acquiring a senior checking account to earn interest, you might first consider a standard high-interest checking account with your bank. You may find that the perks of the high-interest account are the same as, or better than those of the senior checking account.
And if the benefit of acquiring a senior checking account is the rewards, before signing on the dotted line, consider acquiring a basic rewards checking account instead. Often times, non-senior reward checking accounts require no minimum monthly balance, which is a huge shift from the average senior checking account.
One issue the Pew study revealed is that many seniors have a difficult time choosing between senior checking accounts available, and standard or specialty checking accounts, because of all of the variables associated with them, including tiered fees and qualification requirements.
A simpler disclosure format that helps consumers more easily compare senior checking accounts and choose the account that’s best for them is currently under petition within the banking industry, and some financial institutions have already proactively changed leaflets to help make the differences be more clear.
In the meantime, the one message seniors need to remember is that if they’re eyeballing a senior checking account, proceed with caution.
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