It’s time to add free checking to the endangered species list. No-cost access to your own money may soon go the way of the passenger pigeon and the Caribbean monk seal. But this extinction can’t be blamed on global climate change or habitat loss. Blame the shaky status of free checking on regulatory climate change and profit loss for banks.
Recently enacted federal banking regulations restrict previously profitable practices by banks such as big overdraft fees and jacking up credit card interest rates for customers who are late on a payment. And earlier this summer, efforts by the banking industry to block a cap on debit card swipe fees failed. The fees banks charge grocery stores, restaurants, big box stores and other businesses every time they swipe a customer’s debit card will drop from about 45 cents a swipe to 12 cent swipes. That change, set to go into effect on Oct. 1, adds up to a loss of revenue of billions of dollars for the nation’s banks.
The banks’ loss is your loss. The banks need to make up that loss of revenue somewhere and many banks have plans to recover it up by hitting you with new fees: checking account maintenance fees, ATM fees, debit card use fees.
But don’t despair. With a little due diligence, you can keep money in the bank without paying money to the bank. Most bank customers — 71 percent — find ways to avoid paying any bank fees, according to a survey by the American Bankers Association (ABA) released Sept. 1. The survey also shows that 82 percent of consumers spend $3 or less in monthly bank fees for services such as checking account maintenance and ATM access.
"It's impressive that so many customers avoid paying any bank fees," said Nessa Feddis, ABA vice president. "It shows that consumers are savvy and able to navigate the new banking landscape with skill. Often, avoiding bank fees can be as simple as maintaining a minimum balance or accepting a paycheck by direct deposit.”
But … the annual survey of 2,000 adults was conducted in mid-August. Many of the new fees announced by some big banks don’t kick in until fall. For example, SunTrust, a major player in the South, will begin imposing $5-a-month charge for debit card use in November. Regions Bank will impose a $4-a-month fee for debit-card use starting Oct. 1. Wells Fargo — a large national bank — will begin charging a monthly $3 fee for debit cards in October for purchases in Georgia, New Mexico, Nevada, Oregon and Washington.
Banks have an assortment of other tactics to get some of your money — charging for a paper monthly statement or receiving a wire transfer. Another example, Bank of America charges a $3 fee if you make more than three transfers a month from your savings account to your checking account. It pays to read the fine print when opening your checking account and asking questions about fees.
Getting a deal on bank fees — like finding a deal at the mall — requires a bit of legwork. Online banks still offer free checking and if virtual banking fits you, that is an option. Moving your account to a credit union is another option. Credit unions are nonprofit and typically offer better deals on checking accounts, consumer loans and interest rates on deposits. Some resources that might prove helpful when looking for another bank include MyBankTracker.com, Bankrate.com, FindABetterBank.com and FindACreditUnion.com.
You may also avoid bank fees by giving your present bank more business. Many banks offer better deals to customers who maintain a higher checking account and/or savings account balance. You may also get the bank to waive fees if you have an automobile loan or home mortgage at the bank.
Also on MNN:
- 7 money-saving moves to learn from your grandparents
- The story behind the price you pay at the pump (Infographic)