The Hunt for a Better Bank Account
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 acts.
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 answer?
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 particular needs.
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