Wondering how banks are coping with the recession? Easy: They’re dipping deeper into the pockets of consumers who make banking mistakes.
The Washington Post yesterday reported on a topic we’ve covered in depth: increased banking fees.
Customers are paying more to maintain a checking account and withdraw cash from an out-of-system ATM, and when they bounce a check. To make up for declining revenue, many banks are boosting fees and are requiring higher minimum balances for many accounts.
The institutions also have made it easier for customers to spend more than is in their accounts — and then hit them with substantial fees, a practice so vexing to consumer advocates that the Federal Reserve is thinking of regulating it.
Bank revenue has plummeted on the back of foreclosures and rising credit card delinquencies. Now Congress has passed a law cracking down on arbitrary and excessive credit card fees. So the banks have been fighting back.
And the way banks and credit unions “fight back” is by raising fees on customers, particularly for easily-avoidable errors such as ATM and overdraft charges:
Bank of America this year raised the maximum number of times customers can get hit with overdraft fees from five a day to 10. On top of that, it began charging a one-time fee of $35 if the account remains in the negative for more than five days.
[...]
In a study of fees last year, Bankrate.com found that the average bounced check fee rose 2.5 percent from 2007 to nearly $30. The average ATM surcharge in 2008 was up more than 10 percent to almost $2.
Of course, there are a few steps you can take to avoid these sorts of problems:
- Make sure your checkbook is balanced and you know how much money is in your checking account.
- There’s no reason (other than laziness) that you should have to use another bank’s ATM most of the time.
- If your brick-and-mortar bank requires a high minimum balance in order to qualify for free checking, consider switching to an online bank with free no-minimum checking accounts such as Charles Schwab or E*Trade.
One Trackback
[...] that even though I did have enough money to pay her for the book, I wanted to be diligent about my minimum daily balance and be sure that there was enough padding in my checking account to avoid any kind of overdraft [...]