Day after day, month after month, banks pick your pockets with impunity. Not content with charging rip-off interest rates to borrowers, banks have now discovered that lots and lots of little fees add up to some serious cash flow and cause only minor irritation for most of their customers.
It does not seem like enough to fight about, really. A couple of three dollar ATM fees here, a few “overdraft” charges there. It does not seem enough to merit more than a bit of grumbling.
Added together, though, fees and overdrafts total some serious money. For example, in 2009, even as consumers were being stretched to the financial breaking point, banks collected a record $ 38 BILLION in overdraft fees alone, nearly double the amount collected in 2000!
The public outcry against these fees ruled in the government issuing more regulations, rules with little bite due to the cozy, symbiotic relationship banks enjoy with politicians. This relationship allows banks to continue to steal money from consumers and help themselves to our tax dollars at the same time.
The issue of bank scams and hidden charges is an important one, especially when you consider that every penny that they get from you is one that you will not have in your retirement account.
I really believe that by taking some simple actions, you can avoid many of these bogus fees and charges and keep more of your money for yourself.
In this article, I'd like to look at a few common and not-so-common ways banks are reaching into your pocket and show you how you can avoid becoming a victim of these legally legal scams.
Please remember: Not every bank is doing ALL of these things, but there is a chance that your bank is doing at least ONE of them. This list is designed so that you can be on the lookout for unnecessary fees every time you review your statement.
- Fees for Paying Online: Buying online has become HUGE over the past few years, a fact not lost on banks. Already, some banks are charging “online convenience fees” of anywhere from $ 2- $ 4.95 for purchases made over the internet. Other banks are eyeing this as a potential mother lode of revenue. Before you use your credit or debit card online, confirm that your bank DOES NOT charge online transaction fees.
- Free Checking “Low Balance” Fees: You've been a good customer, faithfully managing your checking account to avoid those pesky overdraft penalties, keeping a careful watch on how and where you use your ATM card, going paperless to keep from getting an account maintenance fee. Congratulations! Your frugal ways have earned you an additional FEE- the so-called “low balance” fee for not maintaining a minimum balance. Be sure you know your bank's minimum balance requirements or, if possible, change to a bank that does not require a minimum. You could also try connecting your checking and savings accounts so that the combined amount is always above the threshold.
- Monthly Maintenance Fees: You get your supposedly “free” checking account and find that several months later it has been phased out and converted to another type of account that charges a monthly fee, sometimes as much as $ 15. The cure: Change banks or move your money to a credit union.
- Deposit Returned Fee: A rubber check gets deposited in your account and you get charged for it, meaning you get scammed by both the check writer AND the bank! Nice … Cure: Fight the fee. Banks will often back down when you call attention to their scammy ways.
- Yearly Membership Fee: This used to be limited to credit cards but with credit card revenues way down, what's a poor bank to do? Some banks decided that the level of service they provide to their customers is worth up to $ 29 a year. I say, “NO WAY!” If your bank wants you to pay them so they can charge you more fees- drop them fast and do not even say goodbye.
- Deposit Requirements: To ensure checking account profitability, a few banks require that you have a specified amount of money in monthly direct deposits. If you fail to meet these requirements, a maintenance fee kicks in. Avoid this by switching to an online bank or credit union.
- ATM Usage Fees: Most banks do not charge for getting money from their own ATM's (although a few are starting to do so) Avoid using the ATM's of other banks and in convenience stores where the privilege can cost you as much as five dollars per transaction. If you MUST get cash from an ATM, get the maximum amount possible as the same fee applies wherever you get $ 20 or $ 200. Getting your cash directly from the bank and using your debit card to pay for items can also help reduce ATM fees.
- Getting You Coming And Going-The “Close Your Account” Fee: I kid you not, there are banks who actually charge as much as $ 25 if you close your account before a certain time. Be sure to look at the fine print when you open a checking account to see if there are penalties for closing it.
- A Traveling Life For Me And Yet Another Fee: If you travel abroad and use your ATM or debit card, it's reasonable to expect that you will be charged ATM fees. What is not reasonable, however, is the additional “foreign ATM transaction fee” charged by some banks. If you are afraid of carrying large sums of cash when you travel, traveler's checks may be an option. Even with the fees, they will cost you less than using foreign ATM machines.
- Debit Card Fees- It used to be that there was no fee associated when you used your debit card to pay for an item. After all, banks were making scads of money off credit card interest and were not too concerned about debit cards as a source of revenue. The recession has changed things, however, and a growing number of banks are charging you monthly fees just for the privilege of having a debit card- whether you use it or not. Find out if your bank charges you and demand they stop- or change banks.
- Talk to the Hand … But It'll Cost You: Back in the late 1990's and early 2000's, several banks toyed with the idea of charging you to talk to a live person inside the bank. While consumer backlash forced most of those banks to stop tacking on this charge, the idea of charging to speak with sentient bees is just too irresistible for banks to abandon completely. It is starting to make a comeback, with some banks urging you to open a “cyber account” and then charging you a live person fee if you decide to go inside the bank and chat to a teller. Do not be afraid to call your bank out on this one and if they will not fix it- go somewhere else.
- Legislation Legismation … Bring on The Professional Card: The Credit Card Accountability and Responsibility and Disclosure Act of 2009 (CARD) was supposed to put an end to controversial credit card issuer practices such as hair-trigger interest rate increases, inactivity fees, and usurious overdraft fees. However, the bankers and the politicians they own made sure there was a big loophole in the form of so-called “professional” cards. Originally, professional cards were special credit cards issued to business owners who could actually prove they were business owners by providing some form of business documentation (copy of licenses, DBA, etc.) Nowadays, however, all one has to do is check the business owner box on most professional card applications and VOILA! – a shiny new plastic professional cards arrives in a couple of days. What the consumer is not told, however, is that professional cards are exempt from all the provisions of the CARD act. Banks are tripping over themselves to flood your mailbox with these types of offers and the marketing material usually does not make it clear that these cards are not subject to the new law. The cure? Cut up or stop using any professional cards you may own and set fire to solicitations for them. These are a very, very bad deal.
I have outlined just a few of the banking rip-offs I've come across in the last few years. You can be sure that with the recession dragging on banks and finance companies will become even more creative about separating you from your hard-earned cash.