Published November 04, 2011
By Mitch LipkaSure, Bank of America -- under much public pressure -- dropped its plan to charge customers $5 a month for the privilege of using their debit cards. Does that mean consumers have won the battle against bank fees?
Not a chance. Not only are other fees on the rise -- TD Bank announced increases on Thursday for host of items including wire transfers and certified checks -- there are plenty of hidden fees you might not know about.
In addition to paying to use another bank's ATM (you could face charges from both banks), you can get slapped with charges for things that used to just be part of going to a bank, including using a teller, depositing too much change or getting copies of canceled checks. Americans pay $38 billion a year just in overdraft fees. Consumers face about $620 a year in checking account fees that can potentially be avoided, according to HTTP://Bankrate.com.
That is, if you know the fees you're facing. Sometimes it's not so obvious.
When Val Boston III made a mistake on a deposit at his bank in North Carolina, he says he was charged a $5 fee for correcting the error. Julie Rains, also from North Carolina, says she opened a "no-fee" account for her son when he was about 8, which was then drained by fees assessed for not using the account.
In California, Tracy Hartley found a crazy error that someone made -- depositing $10,000 into her account instead of their own -- and was charged a fee because the other person made the deposit at a teller window, which her account didn't permit without a fee.
"Instead of being rewarded or even thanked for returning the money, I was charged for someone else's mistake," Hartley says.
What else are bank customers getting charged for at some banks?
--Moving money to an overdraft protection account, even though the money wasn't used to cover any overdraft.
--Receiving a wire transfer, deposited directly into an account.
--Staff assistance time to make a copy of a statement or check.
--Getting a printed bank statement.
--Replacing a lost debit card.
--Not making enough transactions in a month.
--Not receiving a direct deposit in a given month.
--Closing your account too quickly.
--Making an online transfer to an account at another bank.
The Pew Charitable Trusts studied bank fees at the nation's 10 largest banks and found the median number of fees charged was 49, ranging from of $1.50 to $175. (You'll pay that $175 to drill open a safe deposit box with a lost key if you want it opened within three days.)
Pew's Suzanne Weinstock advocates for a simple form that every bank would use to disclose what fees might be assessed on any account. U.S. Senators Jack Reed and Richard Durbin joined her on Thursday to add their voices to the push to get that form become the standard for all banks.
"It's hard to know what the fees are unless you wade through all of the disclosures," Weinstock says. That's not very easy when the average length of a bank disclosure is 111 pages, she notes. "The solution to it is to have something like a nutrition label," she says.
Banks, especially big ones, will always have fees. The advocacy group U.S. PIRG, in a report released in April (see http://link.reuters.com/teg84s), found that a majority of banks surveyed were not in compliance with Truth in Savings Act fee disclosure requirements. To call an account free, it cannot have any fees associated with monthly usage or a monthly balance minimum. "A bank can have any other fees -- ATM fees, call-the-bank fees, visit-the-teller fees, early account closing fees, overdraft protection fees -- and still call an account free," explains Edmund Mierzwinski, U.S. PIRG's consumer program director.
Bank of America says it floated the idea of the debit card fee and dropped it because of customer objections. "We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee," David Darnell, the bank's co-COO says in a statement. "Our customers' voices are most important to us. As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so."
Despite the move by Bank of America, Mierzwinski says consumers will face an increasing array of fees from banks similar to the airlines' move to tacking on baggage and ticketing fees.
To recoup revenue lost to comply with recent legislation, many banks are also making it harder to avoid fees, by raising minimum balances, or requiring direct deposit, or requiring electronic-only accounts.
What can a consumer do? Learn about the fees you might face before you see them on your statement. Then figure out whether you might be able to hang onto more of your money by using a different financial institution, which is the gist of the much-publicized "Bank Transfer Day" called for tomorrow by activists.
Before switching banks, be sure to review the fee schedule and terms for any account you are considering so there are no surprises. Talk to a credit union or check out sites set up to help your search, including http://FindaBetterBank.com, which lets you put in details about your banking needs to identify accounts that might be a good fit -- including showing potential fees.
You can also use a checklist from the Center for Responsible Lending to help you keep score of how different accounts could work for or against you as you're shopping for a financial institution.
The author is a Reuters contributor. The opinions expressed are his own.
(Editing by Lauren Young and Beth Gladstone)