Now that the Credit Card Act has been in place for several months and additional restrictions have been placed on credit card issuing banks, it only makes sense that banks would try and find a way to make up for their lost revenue. After all, they are in business to make money, and some of the new consumer protection regulations provided by the act have cut into their profits. Our credit counseling advice is to do a full checkup on your checking account.
One of the ways that many banks are going to recoup some of that lost revenue is to change the requirements for their free checking accounts. Free checking is great, and I am sure that many of you have taken advantage of it. I know I have.
If you’re paying off debt, be aware of any new bank fees.
WARNING-WARNING-DANGER-DANGER Will Robinson! (Do you recognize the line from the Robot on Lost in Space?)
DO NOT IGNORE MAIL FROM YOUR BANK. I know, most of it other than your statement is an upsell of additional services. But for the next several months – be sure you read EVERY piece of mail that comes from your bank.
Most banks will deal with the formerly free checking accounts based on the your balance. If you do not maintain a minimum balance, you will be swatted with a checking fee. A monthly fee, a per check fee, a per transaction fee… the options are many. This can easily go over your budget or disrupt your debt management progress. You need to stay abreast of the situation.
Here are a few of the options that banks have in place . (I’ll leave the names of the banks out of it… you NEED to see what your own bank is doing. We do not promote any specific bank or checking account plan here.)
Bank 1
$8 fee, waived if you make 5 “qualified” transactions. (I am assuming qualified transactions are either good sized deposits, or transactions with interest attached. This is about revenue, after all.)
Bank 2
$9.99 per month, waived if you make 5 transactions per month or maintain a balance of $2,500 or more.
Bank 3
Option A – $6 monthly fee for checking, debit card and online banking.
Option B – $8.95 per month, waived if you keep a balance of $1,500 or make direct deposits.
Option C – $15 per month, waived if you make deposits of $2,000 per month, maintain at least $5,000 in various accounts at the bank, or use their credit card at least once per credit cycle.
And several more options. More features =higher fees=higher waiver requirements.
Bank 4
$5 per month, waived if you maintain an average daily balance of $500
Bank 5
$3.99 per month. No minimum balance, no free checking, no waiving.
Bank 6
$10 per month, but you need to open a Holiday Savings Club account when you open the account. (Hunh?)
Bank 7 (Local)
No maintenance fee and it has a debit reward program. (Hmmm… rewards, instead of “penalties”?)
Bank 8 (Local)
No checking fees, free in-network ATM use. $100 to open the account.
Okay, so there are a LOT of options. And a lot of rules. You absolutely need to read and understand the fine print.
Here’s a short checklist to help you get started in choosing a checking account. The goal is to waive your fees if possible.
1. How much of a balance do you need to keep? If you usually keep a fairly high balance, the options seem to be better.
2. Do you make a lot of transactions – and will those transactions qualify for a waiver of fees?
3. Do you need a debit card or ATM? (This one is easy for most of us.YES!)
4. Is a local bank enough to serve you, for example with their in-house ATM network or local branches? Or do you travel enough to require widespread ATMs? (There is usually an ATM charge due the ATM owner, and sometimes another one for your own bank when you are off network. This is a huge consideration.)
5. Are most of your transactions online? Is there a fee for online banking ?
6. Is an “online only” digital bank an option?
7. Does the account you are considering pay interest that exceeds the maintenance fees?
8. Are you diligent enough in your record keeping and banking to stay on top of the rules and above the minimums? (Dip below those minimum amounts, and wham – you are paying for it. Some minimums are the daily average during a cycle, and others are the account total at cycle close. You need to know. This is a biggie. don’t trap yourself.)
9. Would a credit union be a more viable option for you?
Well, there’s a lot to think about. If that’s not enough, there is legislation pending to lower the interest rate on debit transactions that is paid by the merchant. If this passes – (a boon to the merchants) you will most likely see upcoming charges for using your debit card.
Stay tuned to TalkingCentsBlog for more information as we get it.
Has your bank changed its free checking policy? You need to be able to answer that!
If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today.
