Now that Bank of America added a $5 monthly fee to debit card users, the game has changed. It’s opened the door for other banks to add fees to checking accounts. It’s a trend we’ve been seeing for the last few years, as banks try to recoup lost fees. The question is — will free banking disappear? For now, there’s no reason to pay to bank. You still have options, and if you don’t exercise those options banks will continue to add fees to accounts because they’ll think it’s okay.
I don’t know what it is, but some consumers are complacent about these fees. In talking with friends this weekend, one friend told me she pays $12 a month to have a bank account. I was stunned! There is no reason to pay $144 a year to have a bank hold your money. She said she uses the account minimally. She direct deposits her checks into the account, and pays a bill or two with the account.
She couldn’t explain why she hasn’t closed the account. Is it the hassle? Are we too busy to stand up for our rights? $144 a year is a lot of money for a bank account.
While time is money, it won’t take that long to change an account. Do 20 minutes of research, send 20 minutes at the branch setting up your new account, and then spend 20 minutes switching your direct deposits and debits. You’re done. In the long run, it will save you money.
It’s not that hard to research a bank. Start online with a database like Bankrate that offers you to search for accounts in your city. Also, check bank websites for your options and look for fees. If you can’t find the fees, call the bank and have them send you a list of the fees and terms of the account. There is a sheet of paper with all this information on it for every account. You just have to ask for it.
Consider internet banks. They pay more interest than regular banks, although, don’t expect a big return until the economy recovers. Even the good accounts are only hovering around 1-1.5% interest. At one time, my Internet bank was paying 3-4% interest. My internet bank is still better than the 0.15% yield at most local banks.
Also, consider a credit union. They typically have fewer fees and community rather than corporate feel.
You need to have realistic expectations. While I think you shouldn’t have to pay to bank, be aware that it may cost you $10-20 for some miscellaneous fees. My bank never disclosed to me that it charges $10 a year to have an ATM card rather than a debit card even though I asked if there were fees. By the time I saw the charge on my account, it wouldn’t have been worth my time to change accounts. It’s just $10, and I don’t expect to have the account open forever. Plus, $10 is a whole lot better than my friend who pays $144 a year.
There is risk in changing accounts. You may get hooked on a program or service only to find it change a few months later. Some of the biggest changes happening in the industry involve debit card rewards. They’re disappearing, so don’t expect that reward will stick around forever. Only get a debit card if you’d rather use cash than credit. Debit cards offer fewer protections, it’s easy to incur overdraft fees, and rewards are disappearing.
Bottom line – shop around. Don’t let your bank charge a premium for basic services.