The recent rise in banks looking to make up forlost revenue
caused by tightening credit regulations and a seemingly never
endinglow rate environment has finally hit my doorstep.
Our family received a letter from a major U.S. bank where we
maintain a few basicchecking accounts. The letter kindly
explained that these previously free, no-frillsaccounts would
begin charging a fee of $8.95 per account per month. Of course,
thisfee could be waived if I was willing to use a debit card
ten to twelve times perday between 2:00 and 2:15pm while
standing on one leg or an array of other borderlinecircus
While I'm exaggerating somewhat for effect, the bottom line
was two small checkingaccounts were on the verge of costing
over $200 per year just for the privilege.I had heard similar
stories from clients and friends at other banks and thoughtthat
perhaps there was nothing that could be done. Agreeing with 72%
of those polledin a recent Bankrate.com survey that asked if
people would change banks if feesincreased, I decided that the
cost was enough to survey what else was out there.
So, in the search for a better bank account, is there an
Fortunately, there is.
Depending on your needs, there are a number of options that
might work for you. Ishould say first that, if you are already
performing the tasks they require to qualifyfor the free
account, then your best bet is likely to stay put, especially
if youhave a good relationship with the bankers at your branch.
Failing that, there aretwo primary places to go based on your
Small, local banks and credit unions
Much of the income the larger banks are looking to make up came
in the form of fairlyhigh stakes investing on their part. The
rules allowing them to participate in suchactivities have
become much stricter and, as a result, we all feel some of the
pain.Your local community bank or credit union was unlikely to
have participated in thiskind of activity to begin with and can
therefore afford to continue the same basicaccount services
without a lot of extra fees.
Most of these institutions now have the same technologyas
their larger counterparts in terms of online bill pay and
mobile services. Manyhave also eliminated the concern about
their lack of branches and costly ATM transactionsby either
participating in a network of ATMs where you can withdraw money
fee-freeor they will reimburse your ATM fees up to a certain
amount each month.
If your needs aren't that complicated and you are comfortable
doing your bankingwithout the brick and mortar branch or
looking the teller in the eye, consider someof the more
well-known online banks out there. These institutions keep
costs lowby not having to pay for all those branches and some
still offer - GASP! - interestbearing checking accounts, albeit
at a fairly paltry rate. Most have similar plansin place as the
local banks in terms of making it as easy as possible for
customersto use ATMs, deposit money via mail, and mobile.
There's still no such thing as a free lunch. It can be a
hassle and a time drainto change banks. Transcribing online
bill pay payees, ordering new checks, notifyingdirect deposit
or automatic payment vendors are just a few of the hoops you
haveto jump through to make a move. The banks know this and
upping their fees is theirway of betting that you won't make a
move. If you take the steps in advance to selectthe bank that
is the best fit for you, it will be well worth the effort and
saveyou money, stress and time in the long run.
Chip Workman, CFP®, MBA
The Asset Advisory Group