are checks a thing of the past

It’s called free checking because it’s supposed to be free, but more banks are adding fees and getting rid of free checking. 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 to get rid of free checking.

Bank fees

Fees are taking over at banks making it hard to find a free account. Bankrate’s annual checking survey found only 39% of surveyed non-interest checking accounts are free of charge. That number continues to decrease. In 2009, 76% of the accounts in the survey offered free checking. However, if you live in Cleveland the news isn’t as fee-ridden.

These increased fees are frustrating consumers. In the Bankrate survey, 72% of Americans said they would switch checking account providers if their bank raised fees on checking accounts.

There are often ways to get around all these fees. A majority of the banks surveyed will waive the monthly fee if you meet certain conditions like direct depositing money.

Also, don’t overdraft your account. You’re automatically opted out of coverage unless you agree to opt into the protection. The most common charge is $35, but Cleveland is below that threshold. The fees are so low in comparison to others, they rank second lowest in the country at $28.74.

That’s still a lot of money, so balance that checkbook even if it’s online.

How to find a free bank account

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.