Here Come the New Bank Fees

Be careful what you wish for, consumers.

When nearly every big bank retreated on plans to charge consumers a monthly fee for using their debit cards, most cheered. Consumers stood up to Wall Street, and they won, the thought went.

Not so fast. "Now that banks have backed away from debit card fees amid consumer uproar, the question is where and how -- not if -- they will seek new ways to extract revenue out of customers," I wrote last week.

Cue this morning's New York Times:

Need to replace a lost debit card? Bank of America (NYSE: BAC  ) now charges $5 -- or $20 for rush delivery.

Deposit money with a mobile phone? At US Bancorp (NYSE: USB  ) , it is now 50 cents a check.

Want cash wired to your account? Starting in December, that will cost $15 for each incoming domestic payment at TD Bank (NYSE: TD  ) . Facing a reaction from an angry public and heightened scrutiny from regulators, banks are turning to all sorts of fees that fly under the radar. ... 

... What is more, banks are raising minimum account balances and adding other new requirements so that it is harder for customers to qualify for fee waivers.

It continued:

"Banks tried the in-your-face fee with debit cards, and consumers said enough," said Alex Matjanec, a co-founder of MyBankTracker.com. "What most people don't realize is that they have been adding new charges or taking fees that have always existed and increased them, or are making them harder to avoid."

This was inevitable. According to a study by Marsh & McLennan released last year, more than half of all checking accounts are unprofitable for banks. Since then, new regulations have banned banks' ability to charge tens of billions of dollars in fees, primarily those charged to merchants every time consumers use their debit cards. With interest rates at all-time lows, the vast majority of checking accounts are now unprofitable for banks.

It's also a shame. The debit card fee most banks proposed -- $5 a month at Bank of America, for example -- was actually one of the fairest ways banks could recoup lost revenue and cover overhead expenses. The fee had two things going for it:

  • It was optional. If you didn't use your debit card, checking could still be free or near-free at most banks.
  • It was transparent. Consumers who used a debit card would have known exactly how much their checking account cost every month. The fees would show up on your statement, month after month.

Instead, it looks like we're heading back to the days where consumers think checking is free, but is actually subsidized with a raft of hidden and unexpected fees. What's been lauded as a big win for consumers may have actually pushed them back to square one.

Consumers aren't oblivious to this, of course. Rather than playing musical chairs with bank fees, many are opting out altogether, moving from for-profit banks to nonprofit credit unions with legitimately free checking services. About 650,000 have transferred their money into credit unions over the past month alone, fueled largely by the grass-roots Bank Transfer Day campaign earlier this month.

That's wonderful. Most consumers, needing only barebones banking services, will be better served at a credit union. It's a lot like investing. Most investors don't need an expensive full-service brokerage that lets them pretend like they're George Soros. They need something that lets them buy low-cost index funds, and that's it.

Still, I suspect at least some of those who switch from big banks to credit unions will have buyer's remorse. For all the nasty complaints you can fling at big banks like B of A, Citigroup (NYSE: C  ) , JPMorgan Chase (NYSE: JPM  ) , and Wells Fargo (NYSE: WFC  ) , there's a reason tens of millions still bank with them: A branch in every neighborhood, an ATM on every street corner, 24/7 customer service, mobile apps, and robust online banking. Some credit unions offer comparable services, even reimbursing fees charged when retrieving cash from out-of-network ATMs. Others don't.

One alternative I don't think has received enough attention are the banking services offered by brokerage companies like E*TRADE (Nasdaq: ETFC  ) and Charles Schwab (Nasdaq: SCHW  ) . E*TRADE, for example, offers standard checking account services linked to a brokerage account, and refunds an unlimited number of ATM fees. Schwab offers something similar. Making non-electronic deposits (paper checks) can be cumbersome, but with most workers receiving their pay via direct deposit, this likely isn't high on a list of priorities. On the plus side, banking with your broker is probably the easiest way to get all of your assets -- checking and investments -- under one roof and in one account.

How have recent fees, regulations, and grass-roots movements changed how you bank? Let loose in the comment section below.

Fool contributor Morgan Housel owns shares of Bank of America preferred. Follow him on Twitter @TMFHousel. The Motley Fool owns shares of Bank of America, JPMorgan Chase, Citigroup, and Wells Fargo. Motley Fool newsletter services have recommended buying shares of Charles Schwab. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On November 14, 2011, at 3:44 PM, TMFKlesta wrote:

    I agree that credit unions and brokerage accounts are a good option for many consumers. But the implication that debit card fees would have prevented these other "hidden" fees is far-fetched. While banks may not have charged as many fees, I doubt they would have passed up the opportunity for additional revenue any way they could get it.

  • Report this Comment On November 14, 2011, at 4:14 PM, TMFHousel wrote:

    Even if they tried to find more revenue without debit-card interchange regulations, I think that's justified. Half of all checking accounts are unprofitable, and that number only goes up as long-term interest rates drop.

  • Report this Comment On November 14, 2011, at 5:02 PM, devoish wrote:

    "It's also a shame. The debit card fee most banks proposed -- $5 a month at Bank of America, for example -- was actually one of the fairest ways banks could recoup lost revenue and cover overhead expenses" - Morgan

    The debit card fee was being applied only to accounts with a balance under a set amount, such as $20,000. If people with less than 20k in their accounts are asked to pay the expenses of giving perks or lower cost services to those with more than 20k, they should leave.

    If Jamie Dimon is unwilling to take a pay cut to offer better service at lower cost, customers should leave and get a lower cost ceo.

    While I have you and Molly here in the same thread, you have both suggested that the departing checking accounts were unprofitable and no real loss to the banks, who told you that?

    We already know that the fees and interest increases credit cards hit their poorest customers with paid the perks and miles and insurance policys enjoyed by the platinum cardholders.

    For the record, in the four weeks leading up to 'bank transfer day' $4.5 billion was transferred to credit unions by 650,000 people. The credit unions seemed very happy to get those accounts. The average dollar value of those accounts is just a shade under $7k.

    Best wishes,

    Steven

  • Report this Comment On November 14, 2011, at 5:28 PM, BMFPitt wrote:

    Banks can only charge you fees if you let them.

    These days you can open a new account with a better bank on your cell phone while waiting in their lobby to close your account. I have. And I wouldn't hesitate to do it again if my new bank thought about charging me for the privelage of holding my money.

  • Report this Comment On November 14, 2011, at 5:41 PM, TMFHousel wrote:

    Credit cards aren't the same as checking accounts, fwiw. And those with less than $20k aren't being asked to pay the expenses of richer customers. They're being asked to pay the expenses of their own accounts. Banks can let those with higher balances slide without fees because the net interest income on high-balance accounts is more than a trivial amount.

  • Report this Comment On November 14, 2011, at 5:44 PM, TMFHousel wrote:

    Also, JPMorgan has 11 million checking accounts, and Dimon made $20 million last year. Working for free would could cover $2 per account, or 0.6% of the average checking account over head at large banks.

  • Report this Comment On November 14, 2011, at 5:47 PM, TMFHousel wrote:

    Eh, would or could. Take your pick.

  • Report this Comment On November 14, 2011, at 5:49 PM, TMFHousel wrote:

    Why do you assume that fees on poorer customers are used to cover the perks of richer ones? How do we already know that? It's not that clear. The default rate on low-income credit card users is quite high, and the interchange income from high-income users is enormous.

  • Report this Comment On November 14, 2011, at 5:59 PM, CaptainWidget wrote:

    Government Intervention-Making it most expensive to do banking since 1913

  • Report this Comment On November 14, 2011, at 6:01 PM, ballengerm wrote:

    People with low balances being charged fees are most certainly not subsidizing "perks" for people with high balances. As Morgan mentioned, without fees, checking accounts with balances below $20k are money losers for banks. With the current Fed policies and low demand for debt, banks cannot lend out small account holders' money at a high enough interest rate to make up for the costs they incur maintaining the massive networks of conveniences (perks, maybe?) they offer which are accessible to any and all account holders.

    People are forgetting that BofA is not charging you "for the privelage (sic) of holding my money". They are charging you how incredibly convenient they have made it for you to access and manage your money. There is a good reason credit unions don't have to charge you fees for checking: they don't offer anywhere near the quality of service in many respects.

    I have a checking account with a local credit union. I don't use it. Why? Their online banking sucks, their ATMs are hard to find even locally, when I do find an ATM it doesn't offer half the functionality BofA's do, and they charge me fees for transferring to other banks online that BofA doesn't.

    It's sad to see all this self-righteous consumer anger against the big banks. The big banks continue to build, maintain, and hold the risk for the technology that has made managing and moving money orders of magnitude easier than it was just a decade or two ago. If we keep legislating away all of their opportunities to gain a return on their investment, we will kill all incentive to keep improving it.

  • Report this Comment On November 14, 2011, at 9:44 PM, skeptic94 wrote:

    Paper checks aren't that cumbersome. I stuck them in a pre addressed envelope, put a srtamp on, and placed it in my mailbox. Three days later is showed on my online acct. sometimes, they sent postage pd envelopes.

    Also, putting all your assets under one roof is not generally a good idea. Two or more brokerages is diversifycation.

  • Report this Comment On November 14, 2011, at 9:51 PM, TMFHousel wrote:

    ^ Good point, but it depends on the amount of assets held. Most brokerage bank accounts are FDIC insured, and brokerage assets themselves are SIPC insured up to certain levels.

  • Report this Comment On November 14, 2011, at 10:02 PM, devoish wrote:

    Also, JPMorgan has 11 million checking accounts, and Dimon made $20 million last year. Working for free would could cover $2 per account, or 0.6% of the average checking account over head at large banks. - Morgan

    And there you have part of it in a nutshell. Think of it as a renegotiation, Dimon gets paid $1mil, and 11 million checking accounts keep $1.90 each. How many other overpaid executives are there? I'm guessing the top ten would still make quite a lot after a pay cut big enough to pick up the entire $5.00 fee. and then you get to the next 10 executives.

    Account holders are not being asked to pick up their own expenses, they are being asked to pick up Jamies personal expenses and since the board is not getting a grip on executive compensation, customers are.

    The reason I assume that smaller customers are paying for bigger customers is because that is what happened with credit cards and it is the same management in charge.

    If your numbers are correct - Dimons salary represents $2.00/ account and .6% of checking account costs, then a cutoff of $20k makes your case, not mine because a 2% profit on lending would mean the $20k account earns $400 for JPM, more than the $333 cost/ account your numbers suggest, although $333 seems like a ridiculously high number to me. Like a mechanic telling you an alternator costs twice what you think it should.

    Please forgive me for doubting "common knowledge" which is so often commonly wrong these days.

    Truth be told though, I think the $5.00 fee is fine, it is the hidden fees and the scummy tricks that banks use to get them that pissed me off. Nobody whined about the hidden fee in the cost to the merchant, because they didn't see it. Not seeing it is not good. Seeing and knowing about it is good for consumers, and they can and did get upset if they want to.

    The issues people should and do have with the major banks go well beyond a $5.00 fee and only begin with overpaid and bailed out executives bank customers are paying for.

    The good news is that people will probably continue to move their money. But reading these threads is funny. People seem to think that credit unions do not supply the same services as the large banks (they do), or don't charge for them (they do). It is just more up front and cheaper.

    Best wishes,

    Steven

  • Report this Comment On November 14, 2011, at 10:27 PM, rdub76 wrote:

    The market works. Very simple. Very effective. If you're not getting satisfactory service for what you are paying do business elsewhere. No amount of figures or regulations can trump this simple premise. No need to complain. Certainly no need to demand the government do something about it. They will only do something to benefit themselves. In reality credit unions are the best option for consumer level banking.

  • Report this Comment On November 14, 2011, at 10:57 PM, FutureMonkey wrote:

    I didn't have a problem with the $60/year debit card fee. What I had a problem with was that it was not evenly applied to all users.

    If it is a fee for service then all using the service should pay equally. My problem was that it disproportianately fell on the people least able to pay, whereas the people where $5/month means next to nothing the fee was waived.

    Of course my original issue was with the merchants association actually complaining about the network exchange fees --- everybody knows that people buy more when using plastic than cash or checks -- it's like complaining about how much it costs to feed a Golden Goose. Debit cards are the Golden Goose for most modern merchants and they should have been falling overtheselves to thank the Banks and the Network providers for that gift every month not complaining and agitating for change.

    FM

  • Report this Comment On November 14, 2011, at 11:03 PM, Eerkes wrote:

    Morgan your next article should be "I Give Up, Banks ARE Evil." Your attempts at intelligent dialogue are angering the Fool mob, take your licks and give up.

  • Report this Comment On November 14, 2011, at 11:36 PM, TestEngr wrote:

    It's is interesting how only fairly recently have people begun to talk about using a credit union rather than a bank. I've been using a credit union rather than a bank for at least the last 15 years. I don't know how much money I've saved over that period of time, but I know it is significant. Even though my banking needs are fairly straight forward and not very sophisticated, I have probably eliminated as much as 80% of fees associated with large banks. I was talking to my brother just the other day about using a credit union, but I got the impression that he just didn't want to change anything. That doesn't prevent him from complaining about those same banks, however. I get the feeling that people are just too set in their banking ways to make any changes.

  • Report this Comment On November 14, 2011, at 11:45 PM, playtothebeat wrote:

    Very timely article, Morgan.

    Here's an excerpt from today's issue of Time magazine:

    In 2009 the average checking-account holder paid $327 annually in total fees, nearly triple what banks charged two decades ago. Most of the fees, like overdraft charges, are gotcha penalties. But recently banks have raised no-fee minimums. Only about a third of the customers at big banks have no-fee checking accounts, compared with 70% at the average community bank. Despite the pushback, don't expect fees to fade. Megabanks are a costly mess, with branches, ATMs and data centers spread around the country. While that's made banking more convenient for you, it's a loser for the banks. Even after charging more, the big banks lose an estimated $80 a year on each checking account. As a result, expect ATM and other fees to continue to climb.

  • Report this Comment On November 15, 2011, at 12:24 AM, playtothebeat wrote:

    Steven (devoish),

    I want to address a couple of things you pointed out, which i think are very flawed/uninformed.

    1) "Account holders are not being asked to pick up their own expenses, they are being asked to pick up Jamies personal expenses and since the board is not getting a grip on executive compensation, customers are."

    - do you suggest that every executive should take a paycut to make products cheaper for consumer? I agree that executive compensation has its issues, but that's a different subject altogether (by the way, a job of a CEO is NOT an easy one, and the pay is dictated by the market and by a certain skill set; I have met the last two CEOs of a major bank, and both have described to me, in detail, what their lifestyle is like and what they deal with on a daily basis - it's NOT for everyone). When you go to a local grocery store, do you complain that you're paying $3 for a bag of chips, rather than $2.80 that you could be paying if the CEO/President/Owner of that store took a paycut? I assume not.

    2) "People seem to think that credit unions do not supply the same services as the large banks (they do), or don't charge for them (they do). It is just more up front and cheaper."

    - false. It is a FACT that there are less branches of your local credit union in the nation than, say, BofA or WF or Citi branches. Similarly, there are likely less ATMs and the online services are not as robust. To give you an example, I have an account with a credit union which I never use, because the credit union does not have a branch in California (I established the account while living in Oregon). My credit union also doesn't offer a range of investment services or commercial products, which my bank (and every "large bank") does.

    3) "For the record, in the four weeks leading up to 'bank transfer day' $4.5 billion was transferred to credit unions by 650,000 people. The credit unions seemed very happy to get those accounts. The average dollar value of those accounts is just a shade under $7k."

    - You're right, the credit unions are happy to get them, just as the "big banks" aren't as devasted as you think to see them go. You have to realize, the average net interest margin by a "big bank" is something around 2.5%. In a very simple form, that means that on a $7,000 balance, the bank makes approximately $175 in interest. Knowing how much it costs to maintain an average checking account (I've seen numbers between $240 and $330, depending on what exactly is included and who runs the math), those accounts are actually losing money for the bank. This is the argument that I have seen most often - "the banks are using MY money to lend at interest, and thus they're profiting off ANY balance I have". Clearly, that's not necessarily true.

  • Report this Comment On November 15, 2011, at 2:05 AM, Wyphy wrote:

    - false. It is a FACT that there are less branches of your local credit union in the nation than, say, BofA or WF or Citi branches. Similarly, there are likely less ATMs and the online services are not as robust. To give you an example, I have an account with a credit union which I never use, because the credit union does not have a branch in California (I established the account while living in Oregon). My credit union also doesn't offer a range of investment services or commercial products, which my bank (and every "large bank") does.

    Credit unions are smaller, like banks were years ago. Used to be, if you moved, you closed your old accounts and found a bank in your new town (not always, but generally anyway).

    So, you have an account in a town you no longer live in, and you're complaining that they don't have any local branches? Sorry, but that's just silly.

    Your CU doesn't have the investment services or products you want? Find a new one, same as you'd do with anything else.

    You're basically saying that Credit Unions in general are crap based on your experience with one of them.

    Sure, they aren't for everyone, and they may not have some services, but many have a lot of services, branches, and ATMs. For example, mine.

    I don't live in a huge city, just 120k-125k, but we have some excellent credit unions here.

    My CU has three branches, with two "service centers" that are shared between several local CUs; several ATMs in town, with a network with more in-town ATMS, and coverage to towns about 60 miles away; normal consumer accounts, business accounts, youth accounts, Christmas and Back To School savings accounts; VISA credit cards; IRAs; health savings accounts; deposit boxes; discount tickets to local theaters and theme parks; good online account management (and phone banking too); bill pay services; mortgages; auto loans; home and auto insurance; HELOC; VISA gift cards; wire transfers; even a small scholarship program for students.

    That enough for you?

    I don't use all of those services, but I do have share and checking accounts, get statements and newsletters online, check my balances online, transfer between accounts online, and order check refills online.

    Again, they aren't for everyone, but for a lot of people, they're great.

    Do you travel extensively and need a bank with branches in every city, town and municipality in the country?

    Do you need a bank with ATMs on every streetcorner?

    Do you run a business and need a bank with specialized services?

    Do you need a bank with full investment services?

    If you need any or all of that, then a CU probably won't work for you.

    Maybe you should check out a few Credit Unions near you now and see if they fit what you need.

  • Report this Comment On November 15, 2011, at 8:31 AM, devoish wrote:

    Playtothebeat'

    Let me be the first to welcome you to CAPS

    "do you suggest that every executive should take a paycut to make products cheaper for consumer?" - Playtothebeat

    Yes. Once again, think of it as a renegotiation.

    "It is a FACT that there are less branches of your local credit union in the nation than, say, BofA or WF or Citi branches." - Playtothebeat

    Thats a fact, but I still have no-charge access to credit union ATM's in 38 states. Bank of America has 18000 ATM's in 36 States. Citi is in 16 States, and Wells is the winner in 41 States. The source is unverified, but branches have been closing.

    "Credit Unions have joined together and created Shared Service Center locations around the country. Shared Service Centers allow a participating credit union member to conduct most of their business as if it were their own credit union branch. By sharing facilities, credit unions can offer greater convenience for members to access their accounts in many more locations". - TFCU

    "Find a "No Fee ATM" near you. Using any one of the convenient ATMs in 38 states, Puerto Rico and the District of Columbia, you can access your accounts without being charged a foreign ATM fee. After all, shouldn't that money be yours to keep?" - TFCU

    "You're right, the credit unions are happy to get them, just as the "big banks" aren't as devasted as you think to see them go". - Playtothebeat

    Well its all good then. Perhaps Jamie will cut back the advertising budget in order to stop getting business he doesn't want.

    But I'll guess this; The business of debit cards, banking and fees removes far more money from personal accounts than burglars looking under mattresses for cash ever did.

    Citi's interest checking account currently pays .01% to keep your money safe for you, and at the same time gives its investors, not its customers a dividend of 1.6%. TFCU puts that dividend right into my checking account, the dividend is higher, there is zero risk of "loss of capital" to get it. There is no brokerage fee charged to buy the stock to get that dividend, and I have 24 hour access to that part of my money.

    Thank you for making me think this through. On one hand I am supposed to pay a broker $7.00 to put my money at risk buying shares of citibank in order to collect a 1.6% dividend in the hope that I can sell that share to someone else, someday, for more, with the distinct possibility that I will sell it for a loss. And in order to pay bills I have to pay$300./year in fees to cover bank expenses.

    On the other hand, especially if I have more than $20K invested in Citi stock, I could get 2.25% interest, federally guaranteed up to $250k from my checking account with TFCU. So essentially, the more shares of C I own, the more sense it makes to put it in my TFCU checking account, and not transfer my hard earned cash to investors.

    When you say Jamie was paid $20mil, is that just the value of salary and bonus he was given this year or does that number include the 1.6% dividend he is being paid on evey share of stock he has been given for the last ten years?

    And if I had gotten that $200 dividend ten years ago instead of Citibanks shareholders, at the very least it would be worth $250 today if it was just sitting in my TFCU account at 2%. This line of thought also has me wondering how many small accounts might have saved themselves a $30, overdraft fee if they had earned that money instead of transferring it upward to people wealthy enough to have spare cash to buy Citi stock with.

    Morgan and Playtothebeat, Thanks for helping me realise how those fees don't benefit any of Citi's customers, just their execs and shareholders.

    I like this investing website.

    Best wishes,

    Steven

  • Report this Comment On November 15, 2011, at 8:38 AM, devoish wrote:

    On the other hand, especially if I have more than $20K invested in Citi stock, I could get 2.25% interest, federally guaranteed up to $250k from my checking account with TFCU. So essentially, the more shares of C I own, the more sense it makes to put it in my TFCU checking account, and not transfer my hard earned cash to investors. - oops, me

    On the other hand, especially if I have more than $20K invested in Citi stock, I could get 2.25% interest, federally guaranteed up to $250k from my checking account with TFCU. So essentially, the more shares of C I own, OR the money I have in a C checking account, the more sense it makes to put it in my TFCU checking account, and not transfer my hard earned cash to investors.

    Especially if i am a business customer who cannot risk their money.

    Best wishes,

    Steven

  • Report this Comment On November 15, 2011, at 8:46 AM, ETFsRule wrote:

    I don't know too much about credit unions, but I do know that small, local banks are a much better deal than national banks. They generally have no monthly fees at all, no monthly balance requirements, and they reimburse all ATM fees.

    So it doesn't matter if they don't have ATM's all over the country, you can use any ATM you want at no cost. In fact, sometimes you can even use banks in other countries for free (unlike the large banks)... there is no ATM fee, just a very small currency conversion charge.

    I'm not sure what these amazing "online services" are that people keep mentioning, but with my local bank I have an online account, and it can handle pretty much everything that a Bank of America account can do.

  • Report this Comment On November 15, 2011, at 9:47 AM, TMFHousel wrote:

    <<Citi's interest checking account currently pays .01% to keep your money safe for you, and at the same time gives its investors, not its customers a dividend of 1.6%. >>

    Citi's dividend yield is 0.1%. It is currently barred from paying more than a penny per share per quarter after the 2008 bailout.

  • Report this Comment On November 15, 2011, at 9:56 AM, ballengerm wrote:

    I have had my BofA checking account for 8 years. I paid a few overdraft fees during the first few years I had the account. Then I wised up and stopped overdrawing. I started watching these kind of things like a hawk, and I haven't paid one cent of fees in the last 4 years on that account. My average balance is something like $100, because I mostly use the account for the ATM deposits, then move the money to my ING Direct account.

    How are people racking up $300/yr on average in fees?

  • Report this Comment On November 15, 2011, at 10:06 AM, ballengerm wrote:

    Steven, I'd like more information on the bank you are getting 1.6% interest on your checking account from. I googled TFCU and found several dozen results.

    My credit union (jscfcu.org) only offers 0.45% on savings accounts, 0% on checking. ING Direct gives me 0.9% on savings, 0.2% on checking. BofA gives pretty much nothing on either, but that's why I just use it for ATM deposits.

    I'm aware that the 1.6% is a dividend, and my credit union mentions dividends multiple times across their website, but I cannot for the life of me find a percentage. I'm pretty sure they would put that front and center if it was almost four times the savings account interest rate.

  • Report this Comment On November 15, 2011, at 10:35 AM, MNLegacy wrote:

    "It's sad to see all this self-righteous consumer anger against the big banks. The big banks continue to build, maintain, and hold the risk for the technology that has made managing and moving money orders of magnitude easier than it was just a decade or two ago. If we keep legislating away all of their opportunities to gain a return on their investment, we will kill all incentive to keep improving it."

    Actually, I think what we're looking for is a return on the taxpayer's investment. These banks took HUGE amounts of money from us, presumably to remain solvent, and then thanked us by raising fees. Free enterprise may indeed by the perfect system, however when you accept bail-out money you have deemed yourself no longer involved in free enterprise; you are now a charity case.

  • Report this Comment On November 15, 2011, at 10:37 AM, seattle1115 wrote:

    Months before the BofA kerfuffle, USBank announced a new fee schedule that would have cost me probably $100 a year or so. I had been unhappy with USBank for years, but inertia and laziness prevented me from doing anything about it - once the new fees were announced, though, I closed my account and moved my business to a credit union. Now, I wish I had done it years ago.

    Everything I ever wanted to do - online banking, ATM access, transfers to and from external accounts - I can do better with a credit union. USBank was charging me $5 a month to access my account through Quicken; my credit union doesn't charge a penny. With access to the shared network, I have access to free ATMs anywhere I go - far better access than USBank ever offered. Furthermore, my credit union pays 6% on the first $500 deposited in either savings or checking - meaning that, in essence, my credit union is paying ME an annual fee of $30!

  • Report this Comment On November 15, 2011, at 10:50 AM, Keeg013 wrote:

    I am happy I ditched the big bank syndrome and switched to USAA. Life is great.

  • Report this Comment On November 15, 2011, at 10:58 AM, Gator626 wrote:

    <<Citi's interest checking account currently pays .01% to keep your money safe for you, and at the same time gives its investors, not its customers a dividend of 1.6%. >>

    Even beyond Morgan's correction that Citi actually pays a 0.1% dividend, investors should be compensated more than customers because they risk a lot more with their money (customer deposits are FDIC insured - zero risk of capital loss, while investors have a hypothetical risk of 100%).

  • Report this Comment On November 15, 2011, at 11:22 AM, clintspicks wrote:

    It's the banks that should be careful what they wish for. I think we're seeing a slow death of the system as they (banks) know it. It would be a faster death if more consumers were savvy enough to avoid fees on their hard-earned cash at all costs. I bank through a credit union, rarely use and atm; get my cash free through a free debit transaction at the grocery store when necessary. I pay for most everyday expenses via a no-annual fee credit card with a cash-back award.

    People who pay more fees for using or storing their money than they earn in dividends are rubes.

  • Report this Comment On November 15, 2011, at 11:41 AM, WikiCPA wrote:

    All you credit union advocates are delusional. You have to accept the fact that they big banks aren't for everyone, but to say "i think we're seeing a slow death of the system'? Less than 1% of big bank customers switched to credit unions these past 2 months. The big banks aren't worried, they have angel investors who come back every year to leverage 7-8 figure loans to build buildings/projects, paying who knows much in interest, only to offset it against company income. Let's not get into the narrow mindset and think that checkings and savings are the core business of big banks.

  • Report this Comment On November 15, 2011, at 12:15 PM, Tygered wrote:

    Here's an old fashioned idea. Why don't banks make money by earning it? Why are they sitting on all the billions of tax payer dollars we spent to bail them out from their criminal activities in 2007/2008? Here's an idea bankers. Loan out the money and charge a reasonable rate of interest? You know, like what you guys did back in the day before you all turned into criminals.

  • Report this Comment On November 15, 2011, at 12:26 PM, aggiewes wrote:

    Still the same, I also would have stayed with them if they charged me a fee to. It is just to covenant to have an atm really close.

  • Report this Comment On November 15, 2011, at 12:57 PM, astewboy2 wrote:

    As a business owner of retail, I have to say that merchant processing needs some regulation, it's more like a utility than a free market. Having said that, these costs paid for alot of services people received in banking. I have my checking at a smaller local bank for personal and Wells Fargo for business, because I need the services. I think people need to educate themselves on where they can get their needs met, not by who does the best advertising.

  • Report this Comment On November 15, 2011, at 1:22 PM, Burnwine wrote:

    I find it difficult to believe that banks "need" to charge fees for electronic transfers of any sort, given that the interest paid on savings is about what would be gained by stuffing it under my mattress. Banks have entered the "greed era" and think that they deserve the money. The idea of a bank as a service institution seems to have disappeared.

  • Report this Comment On November 15, 2011, at 2:01 PM, playtothebeat wrote:

    Burnwine, you're right, they don't "need to". They could, instead, eat the costs of processing the transfers (such as the costs of employees who process them, the infrastructure, etc). However, they chose to pass the costs (whether partial or in full - I do not have the numbers to state one way or another with any accuracy) on to the consumer in order to increase their profits. Remember, banks are a business, with a goal of creating profits and shareholder value (assuming publicly traded banks).

  • Report this Comment On November 15, 2011, at 2:35 PM, ed1007 wrote:

    >>>Why don't banks make money by earning it? <<<<

    Because the feds told them they could not. Didn't the Feds limit the amount they could charge merchants for using the banks service? Were these savings "passed on" to consumers? The feds have distorted the free market system. You reap what you sow.

  • Report this Comment On November 15, 2011, at 5:25 PM, clintspicks wrote:

    Credit unions and small banks are what most banks used to be. Big banks are just creepy monsters now. Beware!

  • Report this Comment On November 15, 2011, at 7:13 PM, devoish wrote:

    Ballengerm,

    You are correct, I am getting .45% on my checking/savings account. It is a "share" account that pays better, but also locks up my money.

    Citi's dividend yield is 0.1%. It is currently barred from paying more than a penny per share per quarter after the 2008 bailout. - Morgan

    According to the "quote" page on caps it is a 1.6% dividend.

    I imagine it was on the advice of Mr Dimons lobbyists that they are allowed to overpay execs, in order to get the expertise that lost every penny the company had, but not investors.

    It is still better for me to use a credit union for checking, even if it is not as much better as I thought. And if I am too costly for C or BAC, it works out better for all of us.

    The additional issues of BAC and C and Chase, such as delaying crediting a deposit to my account, and rushing payments out instantly also matters.

    Best wishes,

    Steven

  • Report this Comment On November 17, 2011, at 1:24 PM, SathyaS wrote:

    I see comments that a bank account with $7000 balance pays only $175 to the bank and they will be happy to see these customers go. I don't agree with this logic.

    Most of the $240 to $340 expense per account are fixed expenses and do not reduce when an account is closed. In other words, CEO is not going to take a lower salary just because 10,000 accounts have been closed. Nor can the bank make some money by selling their hardware due to lesser number of accounts. If you redo the math with a lesser number of active accounts, the cost per account will only increase.

    Ideally Bank should increase the number of accounts so as to reduce (or distribute their overheads) their cost per account.

    Thanks.

  • Report this Comment On November 17, 2011, at 3:24 PM, Gato337 wrote:

    I agree with your final comment on online banks. I invest using E*Trade, so I recently decided to close my Wells Fargo checking/savings accounts and transfer my money to E*trade bank accounts. Depositing paper checks will definitely be the biggest drawback. I'm just hoping that they are quick to adopt the mobile check deposit technology that Chase has been touting in their ads. (A customer service rep for ETrade told me that they were already piloting the technology in a few local markets). Once they get that online, banking with ETrade will be no less convenient than what I got with WFC (possibly even more convenient b/c i can use more ATMs).

  • Report this Comment On November 18, 2011, at 1:56 PM, PapaJohn38 wrote:

    As someone pointed out, banks actually MAKE money on no-fee big-balance accounts, whereas they LOSE money on with-fee small-balance accounts. Seems to me that the big-balance accounts are subsidizing the small-balance accounts, not the other way around.

    The only thing I didn't like about the debit card use fee was that I paid the same amount no matter how many times I used the card (assuming I used it at all). If I used it once per month, I paid $5.00/use. If I used it 100 times per month, I paid $0.05/use. That, to me, wasn't fair as I doubt the actual cost of using the card was zero/use. I would have objected much less if the charge was $0.50/use regardless of the number of uses.

    I remember the days when banks charged $0.15/check on checking accounts, instead of $15.00/month no matter how many checks you write. Yes, I'm OLD, so taking inflation into account, that $0.15 would probably be more like $0.50/check today, but the idea is the same. Pay for what you use, not for the priviledge of using an infinite amount of it.

  • Report this Comment On November 18, 2011, at 3:35 PM, DJDynamicNC wrote:

    ^^ I agree with the a la carte pricing scheme being much better and more efficient - as well as generating a more efficient market since it forces people to consider the costs of their actions more directly - but providers can make a lot more money with the "all you can eat" style accounts because most people overestimate what they'll need.

    One of the most egregious examples of "all you can eat" pricing is the "free" parking that many places provide. That's an essentially valueless use for land from a productivity standpoint, and it costs the company in question to own the land, maintain the lot, etc. Those costs have to be priced into whatever product the company is selling, which means when I buy my food from the grocery store and then get back on the bus to go home, I've just subsidized parking for the car folks. Drives me crazy.

  • Report this Comment On November 18, 2011, at 3:35 PM, DJDynamicNC wrote:

    Well, I suppose the parking thing is not exactly an example of "all you can eat" pricing but man do I hate it. :lol:

  • Report this Comment On November 18, 2011, at 3:48 PM, setht23 wrote:

    One of the best parts about being a member of our nations armed forces is the ability to bank with USAA. Best bank ever.

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