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Subscribe to RSSYou should expect bank fees to go up again this year. How can that be? Customer outrage just forced Bank of America and several other big banks to scrap plans to charge a monthly debit card fee.
Bankers still need to replace billions of dollars in lost revenue that have resulted from the sluggish economy and new federal regulations. These new rules slashed the fees banks charge merchants to process debit card transactions and cut revenue from overdraft protection.
“I think we’re going to see them try to impose fees wherever they can do it,” says Greg Daugherty, executive editor at Consumer Reports. “We’re already seeing fees for paper statements and higher safe deposit box costs. Some banks, like Chase and PNC, are even charging customers a $25 fee to close accounts in certain circumstances.”
Higher fees are likely on various one-time services: Certified checks, money-orders and wire transfers. There may be a charge to use a teller, pay by phone, or cash a check from another bank.
Greg McBride, senior financial analyst at Bankrate.com, expects banks to boost their monthly maintenance fee and make it harder for you to avoid that fee.
“It’s what you might call a stealth fee increase,” McBride says. “The fee itself may not go up, but if the balance requirement goes up to get free checking, it amounts to a fee increase for the people who didn’t used to have to pay the fee and now do.”
You should also expect higher ATM fees for non-customers and higher penalties for overdrawing your checking account.
Overdraft fees are already in record territory. According to a study released last week by Moebs Services, an economic research firm, the median overdraft fee jumped from $27.50 at the end of 2010 to $30 last year.
“That’s the largest increase we’ve seen in 30 years,” says CEO Mike Moebs.
Customers will pay if the fee makes sense
Mark Schwanhausser is a senior analyst at Javelin Strategy and Research, a consulting firm for the banking industry. He says customers won’t fight all fees, just the ones that don’t make sense.
“You want to charge me because I want to pay my bill with my debit card? That isn’t something I want to pay. In fact, I’m going to be mad about it,” he says.
Schwanhausser believes bankers have learned their lesson: Customers are more likely to accept a fee if it’s for a premium service that provides real benefits.
“We’ve encouraged banks to rethink things from a consumer point-of-view and not just from a punitive fee point-of-view,” he says. “What’s the added value for them? If there’s added value, then charge for it. If there’s not, then think hard about it.”
For example, Schwanhausser says people see the benefit of an expedited payment if it will prevent a late fee.
Javelin released updated data on Wednesday showing that 5.6 million people who bank switched banks in the past 90 days, a threefold increase over the previous period. A little more than 1 in 10 cited “bank transfer day.”
Make it easier to understand fees
Many people pick a financial institution based on the location of ATMs and branch offices. The smart way to make that decision is to compare fees, terms and conditions. But that’s not easy to do.
According to a study by the Pew Health Group’s Safe Checking in the Electronic Age Project, the median length of the disclosure forms for checking accounts at the 10 largest banks in the U.S. is 111 pages. These banks have 54 separate fees.
(Read: Hidden Risks: The Case for Safe and Transparent Checking Accounts)
“These fees have an impact, so consumers need to know what they are getting themselves into,” says Susan Weinstock, director of the Safe Checking Project.
Food products are required to have nutrition information labels. Pew wants banks to use a standardized disclosure box to make it easy to see the fees and compare them.
“It would be on bank websites and in bank branches and consumers could go online and they could look at different financial institutions and decide which one best meets their financial needs,” Weinstock says.
How to fight back
“You need to have both eyes wide open,” advises Bankrate.com’s McBride. “Read any correspondence you get from your bank, whether it’s by snail mail or e-mail.”
Look at the fee schedule. Watch for changes in the account terms. Odds are they’re not in your favor.
Don’t simply accept a new or higher fee – especially if you have more than one account with the same financial institution. Customers with multiple accounts are the most profitable. Try to negotiate. See if they’ll waive the fee. Ask if there’s a different type of account that’s better for you, one with no fees or lower fees.
If that doesn’t work, you may want to move your money.
“We’ve found that credit unions, online banks and local community banks tend to be cheaper than the big banks,” says Daugherty, at Consumer Reports. “That’s where we’d suggest people look next.”
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Get out of the bank !!!!
Run to your local credit union . Give up all plastic cards ( credit, debit and so on.). The banksters are out to strip us clean of every penny they can get . Face it government will not stop them . Why? because the banksters control most of congress. It is just the banks way of having us pay off their bad debts while they continue to rake in large profits.
bob
most definitely close out your bank account and go to the credit union. Best move I ever made. I even got the satisfaction of answering the Tellers question if there was any particular reason I was closing my account. Told her yes, I'm tired of all the charges and get penalized if I don't keep a minimum balance for them to use, interest free. It felt so good !!!!
Totally right there with both of you. I refuse to deal with the scum known as retail banks.
I think it should be illegal for a company to impose fees and be able to treat them as a kind of revenue.
Fees today are just a tool used to disguise the true price of the product/service you're purchasing, and act to double as a means of steering customers away from your lower margin offerings into your highest margin offerings, without looking like you (the company) don't offer the lower-margin offerings at all.
Reminds me of the crap I see in advertizements for cellphones and TV. You think you are getting such a great deal...but then there's a charge to rent the box that you HAVE TO RENT FROM THEM for $14/month (not including the added costs of better channel packages), or there's a special charge for having a 4G phone vs. a 3G phone...regardless of the data-plan, on top of the data-plan!
Airlines are the same way...ooooh! such cheap airfare, just pay between $15-$40 extra to stow your bags and stay motionless for 4+ hours in cramped seats without much more than a complimentary cup of juice and peanuts.
Show us your actual prices!
If you can't have a 4G phone from the company without paying an extra $10/month for the privilage, then you cannot say that your 4G plans are $50/month, THEY ARE $60/month!
I was with you Bob until you said cut up all the cards. In this economy having credit is really important thus the need for credit cards. I moved to a credit union once the banks started to put all kinds of stipulations on MY MONEY. I have a credit card though my credit union and pay off the balance each month so there isnt any interest to pay. Problem solved.
MakesSense: I've never owned a credit card and I have a high credit score. I've obtained it from financing vehicles, my home, student loans, and many other ways to obtain credit without credit cards.
Credit cards are for fools. Credit should only be on big purchases like a car or a house. No credit cards for us for over 10 years now.
It's an easy thing. If you don't have the cash for it, then you don't need it. Restraint!
Banks extort close to $37 Billion a year in ridiculous fees and penalites.
This is money that gets sucked right out of the economy never to be used to buy goods which put people to work.
No wonder the economy has been sluggish to return to normal?
As pointed out, many of the bank "fees" are negotiable, including charges for a slightly late credit card payment, overdrafts, even safety deposit boxes. Banks provide a good value if you have more than one checking account, a credit card, savings, etc. Even with the evil Bank of America, my wife and I have 2 free interest paying checking accounts (including the checks), free credit and debit cards because we pay off the balance every month, discounted deposit box, a savings account and an equity line with no balance. Not a bad deal, really.
It does help if you know one of the branch officers and deal with the same one each time.
We had a zero fee checking account with BoA for several years. We dumped them for a credit union last year when we got notice they were going to start charging fees for services they previously hadn't and the cost of hard checks more than doubled.
I beg to differ. The most that my old bank would "negotiate" with me was to waive the $8-10 monthly fee for one year ("until you can get back on your feet again"), or have me open a different-style savings account with a $5 monthly fee. The fee on the original account should've only been a $8 charge, because I got electronic statements, but they overcharged me to $10... even though I went in to the bank and had a representative call them, they never corrected the mistake.
At the end of December, I had $20 in my checking account--that means, they took 50% of my money for their stupid fees. Last year, they were charging me $5 a month on the savings account until I "arranged" to do a pointless $25 transfer per month from checking to savings. The money didn't have to STAY in savings, mind you, as they only requested the pointless transfer for paperwork purposes.
I closed my savings account last year, and my checking account in July. Screw 'em, if that's the way they want to do business!
How to deal? Dump your bank and join a local credit union.
Avoid bank fees by not using them. You have a choice.
Join a credit union. There, fixed.
Agreed! I love how there's this whole long-winded article when it can be summed up in one sentence!
Police data show that 1 murder in 12 involves an ATM. Lawsuits are probably the reason why ATM fees are so high. http://h20cooler.wordpress.com/2012/01/11/the-empty-building-hypothetical-redux/
@ Joe Zingher
Oh? So there's no profit-motive in these fees?
Really?
Paaaaaleeeeeeeeeeeaaaaaaaaaaseeeeeeeeeeeee!
How about dump your bank and use cash?
Because a bank can be insured to hang onto my money for me and I won't go bankrupt if my house is robbed or burns to the ground.
If you don't like the fees, don't go with a bank that imposes fees.
Credit Unions are great because they do that, AND they actually work for the community as opposed to a bunch of scummy shareholders that only want to see quarterly growth at the expense of everything else.
That's assuming you have enough to lose.
Eh?
Wouldn't losing any amount of money in a fire/robbery be more money than you'd be willing to lose in a fire/robbery?
I don't know, but I'd rather not lose anything from such an event when there are things I can do to avoid such a loss in the first place.
If everyone switches to a credit union, they will eventually start to run them like the big banks.....................
That depends on how the credit union is set up. The one I belong to, each member has a vote on any/all changes, and able to vote who runs the place. It does make a difference between credit unions.
@ Cashonfire
Interesting scenario, but credit unions aren't publicly traded like retail banks, so there's far less of an incentive to nickel and dime the customers.
On top of that, the barrier to entry is a lot lower for credit unions to form, so if one starts to get out of line, there are always plenty of other, friendlier ones that a person could take their business.
Credit unions are not-for-profit and owned by the customers (members). Not likely they'll act like a big bank.
How to deal with higher bank fees in 2012---That's a no-brainer, change banks
Provided it doesn't become an industry standard.
If one has to travel intercontinental on business many times a year and doesn't want to get locked into a single carrier, which airline should they choose that doesn't have any baggage fees?
Ally Bank (Online) - FREE Checking,great interest rates for checking and savings, deposit checks via scanner and computer, no ATM fees (rebated), auto credits (from $2 to $5) for shopping at retailers you may got to already (I got $7 back last month without knowing I was even qualifying)
Banks have to replace fees due to reduced income in current economic conditions. It must be remembered that they were involved in creating the current conditions. So, they want to balance their inadequacies on the back of those customers, who without, they could not even exist. Again, inequality?
I discovered yesterday that the fee on my savings account went from $3 to $5 if I did not do certain things. What they were was changed by the bank and when I inquired it was a very pleasant surprise. Deposit $25.00 per month into savings or maintain $300 balance and no fee! This was a change from previous since they required more money in balance and nothing was mentioned about deposit. Made the changes with Customer Service at Bank of America and all is well again! My advice = ask and you shall receive!
Until next month when they change the rules again. Go directly to your credit union in town and open up an account.
@ Clark's Eye on Books
I'm glad you had such a pleasant experience with a timid thief.
What do you think they will do when you turn your back on them again?
Stop supporting these scummy business practices
I find it interesting that the writer says that banks, "need" to replace billions in lost revenue. Is it really a "need" as much as a "desire"? I "need" to justify to the shareholders my mult-million dollar per year salary and bonuses, perhaps? Maybe the bankers need to approach their businesses like most small-business people, recognizing that although they (can) provide a valuable service, people have alternatives, and so the bankers should quit trying to try to collect salaries and bonuses that rival the monopolists and the oligarchs. They managed to get away with this behavior over the recent years due to lax oversight, and most likely lacking or poorly written regulations, but that was then and this is now. Perhaps the executives and the shareholders will need to wrap their minds around lower returns on labor and equity, kind of like the rest of us.
Not going to happen on their own volition, they will have to be dragged kicking and screaming into ethical practices.
Don't want banks to charge fees in place of truthfully divulging price? Then make it illegal for a business to impose a fee and treat it like revenue. Fees should only be for justifiable reasons and cannot simply be a profit motive. When fees are collected, they need to be kept in a reserve account to counter whatever particular undue-cost the customer has imposed on the business that was outside of the terms of the transaction. If there is not undue cost, the fee is refunded, if there is a cost, the remaining balance is to be refunded after the costs.
Watch a lot of business like airlines and retail banks scream at the top of their lungs over a stipulation like this!
"Bankers still need to replace billions of dollars in lost revenue that have resulted from the sluggish economy and new federal regulations. "
If they (banks) can't find any non-predatory replacement revenue, then obviously they must cut costs, just as preyed upon consumers have had to do all along. They also need to cut their loan shark interest rates, which, by the way, materialized only over the last decade or two.
I'm also tempted to say, "Let them (bankers) eat cake!", but I'll resist that non-constructive temptation. I will say that they should not profit from their misdeeds.
(c) 2012
USAA is the best! No fees, rebated ATM charges each month, check deposits right from my smartphone, and most importantly, great customer service!! I switched from Wells Fargo to USAA last year and would NEVER go back!!
After contemplating a change for a long time, we migrated over from Bank of America to a Credit Union last October leaving the BOA accounts open until just this week to ensure all of our auto-debits had been moved to our new Credit Union. We walked into our BOA to close our accounts. What a frosty reception from our banker. Oh - well! We have had nothing but positive encounters with the Credit Union and are glad we made the switch!
The thing I don't understand is that I have zero fees with my bank (a top 4 'Big Bank'). Free checking, free online banking, free ATM access across the country, free transfers, free billpay (saves me the $0.45 for a stamp). I just re-fi'd my mortgage from 5% to 3.25% with few fees involved (saving us more than $3,000 annually in interest)Where are people banking and what products are they being assessed fees on? So other than what they make on interest for my mortgage, the bank makes no other money on me, but provides me with all the services I need. Plus I have the way to save acct and make 2% interest (made 5% my first year in 2009) on that savings. Granted I make very little interest on my checking accounts, so what...they cost me nothing. My checks are free as well.
This is why I'm so curious why people get so bent out of shape...where are you banking and what products are charging you 'unfair' fees?
I use a bank for my daily checking account, plus have checking, savings, and a small money mart at the credit union. The bank tried, and failed, to raise the amount of balance in my checking. When I started banking there, if I kept a balance of 300 in checking, there was no fee.
One month, I had a fee of 7 dollars added. I asked why, they said they had raised the minimum amount. I looked at him, pulled the original paper I had when I started banking, showed him the 300 $ amount, my signature, and the banks person who also signed it.
I then asked for a copy of the new contract. He didn't know wether to S or go blind on that one. I told him to remove the charge, never try that again, or my attorney would be suing them for breach of contract.
To this day, that charge has never showed up again. I guess someone got the message. The only reason I have checking there, is to keep them halfway honest.
If you get socked by the "Minimum Payment Disclosure" on your statement, its a fraud, get a lawyer mention Truth in Lending and Reg. Z. You can get $500.00.
Other than the cost of buying checks, which is very seldom, I have absolutely no bank fees. People need to shop around I guess. I bank with Chase, do not have a debit card, do not use the ATM, pay all my bills with direct debit. it' a breeze
Couldn't even get through the second paragraph. These A-holes need to replace lost revenue!!! They caused it, They lost it, We replaced it, They paid us back after making record profits with it. And now they need to replace it!!! What the hell about us!!! We need to replace our losses also and everyday we loose more and more to the criminals.
But please oh please keep the Fed Rate low! Could you imagine if banks had to offer a competitive interest rate for deposits instead of shoring up all of their liquidity requirements by borrowing from the Fed for virtually nothing?
Won't somebody please think of the arbitrage?!
When I read about the Fed's statement to keep rates at near-zero, it's just like Groundhog Day! The Fed dictates 2 more years of a shrinking middle class and wage-stagnation.
I actually switched from a credit union to a bank when my credit union started charging me a $5 monthly fee in my savings account. They wouldn't let me have just a checking, so I closed all my accounts and switched to PNC. Guess what, I haven't been charged a single fee since switching. Big bank or credit union, there are good ones and bad ones, just read the fine print before you open your account and know how their fees work.
Agreed. Stay wary as a customer when working with any business...sharks come in all shapes and sizes.
If people to the time to do that, they would be flocking to credit unions and the banks would start whining about unfair competition.
We finally just moved our money to a credit union, no fees, plenty of perks and they actually treat us like real humans.
If banks want to charge fees, let them, but customers should not have to wade through everything to find out what they are being charged for and why, when banks realize that people will no longer tolerate their mishandling of accounts they might wake up, until then, find a good credit union and save yourself money and a ton of grief.