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Stop Robbing Your Own Bank Account

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The Motley Fool's Fiscal Fitness Boot Camp is in session! Every weekday this month, we'll walk you through a fresh money-saving/money-making tip as we work toward finding $2,000 in savings you didn't know you had.

Surcharges, maintenance fees, courtesy services, setup costs -- what banks charge consumers these days gives new meaning to the phrase "bank heist."

Of course, no one's under the illusion that automatic bill payment, direct deposit, ATM access, and free toasters are offered out of sheer gratitude. Estimates from last year show that institutions like Bank of America (NYSE: BAC  ) , Wells Fargo (NYSE: WFC  ) , Citigroup (NYSE: C  ) , and JPMorgan Chase (NYSE: JPM  ) raked in nearly $40 billion in overdraft fees alone during 2009. Plus, they're desperate to raise fees wherever they can before new regulations put the kibosh on questionable practices.

But desperate banks aren't the only ones to blame for the fee frenzy. More and more customers are in cahoots with the very institutions skimming a tidy sum from our accounts. Make a few stops at the Kwik-E-Mart ATM, fall a penny below your minimum balance, and you end up shelling out $25 to $105 a month.

No wonder my bank teller is always smiling. Customers like me are accessories in robbing our own accounts!

The costs of convenience
If you haven't scrutinized your monthly statement lately, you might be surprised how handsomely you're tipping your financial institution for the favor of babysitting your cash. According to Bankrate.com's 2009 survey of big institutions, here's what we pay for ...

  • Simply having a bank account: $1.77 a month for a noninterest account if you fall below the minimum deposit requirement (which averages $68.32), and $12.55 a month for an interest-bearing account if you fail to maintain an average balance of $3,372.18.

  • Using an out-of-network ATM: an average of $3.54, with $2.22 of that charged by the out-of-network bank and $1.32 by your bank.

  • Bouncing a check, or having nonsufficient funds to cover a transaction: $29.58. (That doesn't include fees the bank may charge for every day the account is overdrawn -- anywhere from $2 to $5 -- or the $20 to $30 merchant fee you're slapped with by paying with rubber.)

  • Bouncing a second, third, and fifth check: The Bankrate survey found that more institutions are assessing higher fees for those with multiple offenses. The average cost for the second through fourth overdraft is $33.88. The fifth offense will result in a $36.19 fee per item at 17% of the banks surveyed.

Slash your monthly bank tab
Planning and diligent record-keeping will help you keep your money in your account and out of your banker's. Here are some pointers that will help you pocket as much as $100 on next month's bank tab.

Find the right banking fit for your money habits. That means signing up for an account with a minimum required deposit that's realistic for your budget.  Also scrutinize other frequently used services -- like finding an institution with ATMs within a stone's throw of your everyday haunts or one that refunds fees when you cheat on your bank machine.

Sign up for services (or upgrade your account) to get fees waived. In many instances, using the bank's online bill payment service or simply having your paycheck directly deposited into your account qualifies you for fee-free checking or free software syncing.

Link your accounts. If you have checking and even a small savings account at one institution, sign up for overdraft-triggered balance transfers, which typically cost $5 to $10 per rubber check. It's the "courtesy overdraft protection programs" that often carry an enrollment fee, as well as a stiff APR on overdrafts.

Schedule weekly withdrawals at your bank. Go ahead and get a little exercise. Walk the few extra blocks to use an ATM owned by your bank for free. This can significantly cut the cost of cash. Or withdraw money at the store's checkout counter when you pick "debit." However, if your bank charges for debit purchases ...

Opt out of the bank's default "bounce protection." You may not even be aware that you have bounce protection on your checking account. Banks notoriously offer this very profitable feature by default. But it doesn't offer you any benefits you can't get with a more typical overdraft protection plan. So instead ...

Enroll in a bona fide overdraft protection plan (if you tend to skate on the edge, month-to-month). These plans send overdraft charges to your credit card or other line of credit, usually with no fee. The trick here is that you must formally sign up for the plan. And while there may be some small fees associated with it, consider the money you will save if you bounce even one check without this coverage.

Upgrade your account to get free software syncing. If you use Microsoft's Money or Intuit's Quicken, check their websites to find official banking partners (often cheaper than the unofficial ones). You may also be able to avoid this fee at some institutions by upgrading your account or, again, using the bank's online bill payment service. Weigh the costs of each of these moves to see which way you'll come out ahead.

Actually read that "new terms and conditions" leaflet in your statement. Credit card issuers like Capital One (NYSE: COF  ) , Discover Financial (NYSE: DFS  ) , and American Express (NYSE: AXP  ) take a lot of heat for obscure fine print in their agreements, but many banks deserve just as much blame. So turn up the lights and grab your reading glasses. That little leaflet is a map to your bank's fee minefield. That's where you'll discover that you're paying a couple of bucks to speak to a live customer service rep, or that the interest rate on your interest-bearing account is now zero-point-something percent.

Ask nicely for the fee to be waived. Don't just take your punishment sitting down, particularly if it's a first-time or infrequent offense. Call and ask (nicely!) for forgiveness, and specifically for the fee to be waived. Many banks will gladly let one slip-up slide.

Related Foolishness:

Tune in throughout the month for the latest installment of our Fiscal Fitness Boot Camp, as we stay on course to produce at least $2,000 of savings for you.

Fiscal Fitness instructor Dayana Yochim walks out of her way to use her bank's ATM. American Express, Discover Financial Services, and Microsoft are Motley Fool Inside Value picks. Bankrate is a Motley Fool Rule Breakers selection. Motley Fool Options has recommended a diagonal call position on Microsoft. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy is fee-free.


Read/Post Comments (4) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 28, 2010, at 12:53 AM, imntacrook wrote:

    The best way to avoid these fees is to not bounce checks. If I was a bank I'd do the same thing. Don't you think it costs them money when a check bounces? Just a few thoughts

  • Report this Comment On February 22, 2010, at 5:16 PM, ttocsmij wrote:

    FYI: Microsoft Money is no longer available.

  • Report this Comment On February 22, 2010, at 5:17 PM, ttocsmij wrote:

    FYI: Microsoft Money is no longer available.

  • Report this Comment On February 22, 2010, at 5:20 PM, ttocsmij wrote:

    And, remember when bankers used to be able to afford to operate on the money they made investing your money and renting out safe deposit boxes? Of course they didn't command 7 or 8 figure salaries in those days either. Don't you wish everyone's salary kept up like that? :-))

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