Consumers are a vocal bunch about their likes and dislikes, but there’ve been few personal finance issues in recent history that have created such an absolute uproar as bank fees. Bank fees are a hot button topic – and for good reason. Fees are now so prevalent that a whopping 60% more bank accounts carry fees and balance requirements than a year ago and the top 5 banks are planning on levying $3 billion in new fees for 2012. The common justification is that the banks now need to recoup some of the revenue lost due to recent financial reforms. But the resounding sentiment is that the customers aren’t buying it.
So if you’re finding yourself slammed with fees, what can you do?
The first step is to take a deep breath and realize that you have a choice. One of the beauties of living in this country is the freedom of commerce. If you don’t like a product or service, you’re free to go elsewhere. But it’s important to make decisions wisely and not fall prey to fear mongering. One way to figure out what’s best for you is to create a checklist of some of your personal banking pain points. If your bank doesn’t pass muster, it’s probably an opportune time for you to start looking to save your money elsewhere. Here are some points that you can use as a guide:
Debit card fees
Some banks have taken to slapping on monthly debit card fees each month the card is used for purchases. Fees can range from $3 to $5. Out of all the fees, these have caused the greatest outrage – people apparently aren’t so keen on getting charged to access their own funds. But there’s no need to pay these fees needlessly. There are tons of other debit card options that are 100% fee free. Many online banks, smaller regional banks and credit unions offer viable debit card fee-free options.
While free checking was abundant in the past, the tides have definitely changed. In the past two years, the percentage of banks offering free checking dropped 30% while the average monthly fees have risen to a startling $14.15 for interest-bearing accounts. One way to avoid these fees is to maintain a monthly minimum balance (often well into the thousands of dollars), but there’s no need to subject yourself to that pressure. There are many checking accounts (some even interest bearing) that will offer fee-free checking, even with a $1 balance.
Despite using our best financial judgment, we’ve all gone over our balance at one time or another. But to be charged the ever-increasing $31 average when you exceeded your balance by as little as $1 seems, well, excessive. One way to avoid these fees is to choose not to opt in when your bank offers you overdraft protection. If you don’t opt in they can’t charge you for covering a payment. But then you run the risk of bouncing checks. One way to avoid flat overdraft fees and keep from bouncing is to head to a bank that doesn’t charge them. Rather, try an account that charges an overdraft line of credit at a low interest rate. For a 10-day $5 overdraft balance you would pay $30 in traditional overdraft fees, but only pennies with this type of line of credit.
In 2011, the average amount that banks charged non-customers for ATM use rose to $2.40. Add to that the average $1.40 that your own bank may charge if you go out of network, and you’re paying about $3.81 just to access your own money. But there are ways around this. Finding a bank that doesn’t charge out-of-network fees is the easiest way to avoid ATM fees, but also try finding a bank that has a vast network. The more in-network ATMs, the less chance you’ll ever have to go out of network. Better yet, some banks offer free ATM finder apps that’ll guide you to the nearest in-network machine, no matter where you are.
So there’s no need to sit idly by, accepting fees as part of your banking fate. Delve into the fine print and decide for yourself whether or not the fees are worth it. And if they’re not, go ahead and do something about it.
What are your thoughts on this, Saver? Do you think unreasonable fees like debit card fees are enough to get you to switch banks?