Tuesday, November 26, 2013
Bank Fees! Don't Pay Them!
For 27 years I did not have a bank account. My savings, checking, and credit card were all handled through my little one branch credit union. I simply did not have to worry about fees and mystery charges. Everything was free if you followed a few simple rules, like pay your credit card bill on time. With the death of my mother-in-law we needed a bank with convenient branches in three different states. That meant one of the big four. Working with B.O.A. Citigroup, J.P. Morgan Chase, or Wells Fargo requires a different mind set. Unlike my not for profit credit union (still my primary financial site) they are in business to make money for their managers and share holders. I started my relationship with one of these banks with a simple premise, I do not pay fees. Ever! You are borrowing my money at close to or exactly 0.0% interest. You then lend it out at rates between 4% and 23% to your customers or victims. If that isn’t enough profit, it is your problem. Not my problem! Over a year and a half they tried to slide charges into my accounts on three different occasions. In each case a phone call to the branch manager resulted in refund. If he did not refund my money, I would have certainly closed that account. Let’s look at some of these fees. One of the oldest is the monthly checking fee. This can run about $10.00 a month. For most banks this fee is waived if you keep more than $1,500 in the account. Be careful not to get too close to the line. The way the bank calculates the minimum balance is not the way you calculate the minimum balance. True no minimum balance free checking still exists in credit unions and even some banks. If you can’t keep an acceptable minimum balance in your current bank, do a little searching on the web. Overdraft fees are a veritable gold mine for the banks. Overdraft fees are currently running at $32 Billion a year. From the stories I have heard, these fees are generally triggered by the careless use of debit cards. Not only do you get hit with a $35 overdraft fee but at B.O.A. if you don’t make it right in 5 days you get hit with another $35 fee. If you can’t handle a debit card, lock it up. Use cash and paper checks. Be sure and enter those withdrawals in your check register. ATM fees are totally unacceptable. You’re charging me to access my money? The average charge for using an out of network ATM is $4.00. Don’t pay them. Ever! Keep enough cash on hand, go to a brick and mortar branch, or find another bank. Schwab runs a bank as well as a brokerage firm. They will refund your ATM charges when you use an out of network machine. Because I am an old school curmudgeon who still uses paper, I don’t really know about these things from experience but some banks charge $10.00 a month to download information to Quicken. Don’t pay the fee. Use mint.com, Money Strand, or Personal Capital instead. Again I have no experience with any of these programs, so don’t take my word on this without some research. E Banking with the big four can have its disadvantages. B.O.A. charges its e-customers a $5.00 teller fee for using a brick and mortar branch. If, like me, you need two banks, go ahead. Open accounts with two banks. I still use my credit union as the central hub for various transactions to brokerage accounts, mutual fund companies, and the like. However, I need checks with a local bank as well as quick access to cash. The local branch of the big four bank that handled my mother-in-laws account seems much better than their other branches. I have opened a simple checking account about three miles from my house. That is a lot more convenient than 500 miles from my house. If they disappoint me with fees, I will fire them. They are not the only bank with a branch in my little town. Start with the premise, “I don’t pay fees. Ever!” There is almost always a way to avoid paying a bank to use your own money. Recently, my wife wanted to help one of her friends who was in a bit of a bind. She needed $400 and she needed it fast. Normally we don’t do that sort of thing. Mixing money and relationships is a dangerous business. Here is a link to a post on the subject of loaning money to friends or family members.