The bankers -- always innocent, in their own minds, of squeezing customers -- blame the fee increases on the pro-consumer legislation passed last year. "I have to charge you more," they say. "The government made me do it." They hope that you'll blame the consumer protection laws rather than their own interest in raising revenues.
But think for a minute. The new laws reduced bank fees by stopping abusive practices. Was it fun to sign up for a "fixed-rate" credit card, only to learn that the bank could raise the rate at any time? Were you happy when you were jumped to a penalty interest rate, even though you made all your monthly payments on time? Did you love those $35 overdraft fees, imposed without your permission if a debit-card purchase of coffee and doughnuts put your account $5 in the red? Who would bring those and other nasty fees back?
You might think that only deadbeats paid penalty fees, not nice people like you. But millions of middle-class consumers got caught in bank traps at one time or another. In an October, 2010 call with Wall Street analysts, Bank of America's CEO Brian Moynihan said that complaints about overdraft fees were running at an all-time high. "We found that customer reaction to the fees was hurting our franchise and long-term would hurt our shareholders," he said. He stopped them, just before the new law moved in.
What the new regulations actually did was smoke the bankers out. Instead of fees that slam you by surprise, you now face costs you can see upfront. That helps you make price comparisons among institutions. You can choose to pay $6 a month for your checking account or find one of the 65 percent of banks that still offer checking free with no minimum deposit.
If you can afford to keep certain minimums in your account, you don't have to move your money at all. Your fees will be waived. Bank of America introduced a free checking account with no minimums, provided that you use only ATMs (no tellers) and only bank online.
There are four places to look for lower-cost bank accounts.
1. Online banks. They've come a long way from the basic savings accounts that they started with a decade ago. You can now get checking accounts, free bill-pay services, mortgages, budgeting tools, and retirement accounts. A good place to look for deals is DepositAccounts.com. Here are two banks with free, interest-paying checking accounts and no minimum deposit: Clear Sky Accounts from Chesapeake Bank, currently paying 1.06 percent, and CapitalOne Bank, at 1.01 percent.
2. Community banks. Smaller banks often (not always) charge lower fees than the big banks do. Some are too small to offer up-to-date services such as paying bills online, but there are plenty of mid-size banks that do. To check out the institutions in your area, including credit unions, go to Move Your Money -- a project that started in 2009 as a protest against damaging actions of big banks. The website claims that, since then, 9 percent of Americans have moved their money to more consumer-friendly places.
3. Credit unions. It might surprise you to learn that everyone is eligible for at least one credit union. These institutions serve particular member groups. In general, they charge lower fees on credit cards, auto loans, and checking accounts, and pay higher interest rates on savings -- not the top rate, but above average. They're also more customer-friendly than most banks. You can find someone to talk to about your finances and even appeal a decision.
To find a local credit union, enter your zip code, church, company, school, or city at FindACreditUnion.com, to see what you might be eligible for. If your search comes up blank, turn to the Pentagon Federal Credit Union. Ostensibly, it's for federal employees but in fact is open to anyone. To become a member, all you have to do is spend $20 to join the National Military Family Association or $15 to join Voices for America's Troops. Checking accounts are free if you direct-deposit at least $500 a month (otherwise, you pay $10 a month).
4. Prepaid debit cards. With these cards, you don't need a checking account at all. They're a bank-in-your-pocket, offered by various companies in conjunction with Visa and MasterCard. Your paycheck, other benefits, or cash are loaded onto the card. You can use it to make purchases or get money from ATMs. Fees have dropped sharply. Cards are now available with no sign-up fee, no fee for making transactions, and monthly fees in the $5 to $6 range -- that's competitive with checking accounts that require no minimum balance. Some prepaid cards waive monthly fees if you use them often enough or deposit a minimum amount per month (at least $350 a month for a Bank Freedom Prepaid MasterCard).
Debit cards can be rough trade -- charging fees every time you make a move. To find the ones worth having, compare prices at CreditCards.com. Read the card's Terms and Conditions (and fee chart) before signing up.
Critics of the new consumer protection laws claim that they're forcing low-earning people out of the banking system and into the hands of expensive payday lenders. Not at all. Debit cards are the answer for many of these folks. Soon, banks will be offering these cards as an option, too.
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