Centsible Mom: Finding a way to avoid bank fees

2013-03-03T00:00:00Z 2013-03-03T21:07:50Z Centsible Mom: Finding a way to avoid bank feesAngela Pittenger Arizona Daily Star Arizona Daily Star
March 03, 2013 12:00 am  • 

Remember when gas was under $2 and most banks offered free checking? Ah, the memories. Those days are long gone.

Some Wells Fargo customers have recently been notified of fee and waiver policy changes to their accounts (remember that notice you got in tiny print?). Checking accounts for Wells Fargo cost between $7 and $30 per month.

Wells Fargo customers aren't alone. For example, Bank of America charges $15 a month and Chase Bank charges $9 per month.

"Fees have been trending up for years," said Greg McBride, senior financial analyst for Bankrate.com.

If you're like me, you're probably wondering why they're charging so much. I mean, Wells Fargo alone has 70 million customers, and Bank of America has more than 50 million. Seems like a lot of money.

Well, according to the American Bankers' Association, a bank's cost of maintaining an account runs between $250 and $300 a year.

Processing and technology costs, providing convenient access (ATM, debit card systems, online banking, etc.), staffing, legal costs, fraud costs, capital cost and FDIC insurance are all part of that number.

They say they're also trying to make up for lost revenue caused by restrictions imposed by Congress and bank regulators.

"The economics have changed a lot with new regulations over the last couple of years," McBride said.

As a result, the trend of higher bank fees has kicked into overdrive, and the little guy has to pay.

In the last year bank fees have gone up an average of 4.2 percent, taking the average monthly fee from $14.15 to $14.75 per month, McBride said.

"Some bank fees have gone up faster than inflation," he said. "The important thing to keep in mind as consumers is we're not hostage to higher fees."

Many of the large banks have fee-waiver policies.

"Wells Fargo will always have a range because different customers have different needs," said Richele Messick, a spokesperson for Wells Fargo. "We will always offer ways to waive the service fee."

Depending on the account you have, that waiver policy might require you to keep a minimum balance, sign up for direct deposit or use your debit card a certain number of times.

Some accounts require a pretty hefty minimum balance to have the fee waived. One Wells Fargo account has a minimum balance requirement of $2,000. Bank of America's is $5,000 and Chase Bank requires $1,500.

While those numbers seem pretty steep, McBride said it's low compared to the national average of $6,000.

If you can't keep that much money in your account on a daily basis, chances are, you don't have the right account for your needs.

"We really encourage people to talk to bankers to make sure they're in the right account for them," Messick said.

If your bank doesn't have an account that suits you, there are other options.

"Community banks, credit unions or online banks still offer lower fees or standalone free checking accounts," McBride said.

Another thing to keep in mind about minimum balances is if you have, for example $2,000, McBride says it's probably smarter to get a free checking account at a small bank and "deploy that $2,000 into a higher yielding savings account."

What it boils down to is being aware of your accounts.

Messick said Wells Fargo is communicating with customers "well in advance, so they are aware."

So, check your balances, and stop throwing away the notices they send - you know the ones with small print that you don't even look at?

Yeah, make sure you read those to avoid any surprises.

Search Online

If you've never been to Bankrate.com, I suggest you take a look. You can search for a bank account by entering a type of account, city and state, and it gives you a list of banks, along with fees and definitions of terms.

Tips to avoid fees

Carol Kaplan, spokesperson for the American Bankers' Association, offers the following tips to avoid bank fees:

• Shop around to find free checking accounts.

• Make use of direct deposit. Many accounts are free when you have at least one direct deposit a month.

• Keep a minimum balance to avoid monthly fees and accidental overdrafts.

• Use your bank's ATM machines. If you do have to use one that is not owned by your bank, take out a larger withdrawal to avoid going back more than once.

• Opt for electronic statements and notices.

• Use online or mobile banking as often as possible.

The following tips are to avoid incurring overdraft fees:

• Sign up for email or text alerts to be notified when your balance falls below a certain level.

• Opt out of overdraft coverage for debit cards.

• Link your checking account to another account, so funds are transferred to cover a payment you don't have enough for.

Other banking options

• Local financial institutions

Here are some local credit unions that offer fee-free checking:

Hughes Federal Credit Union offers free checking with no minimum balance. 794-8341.

Pyramid Federal Credit Union offers free checking with no minimum balance. 795-7950.

Tucson Old Pueblo Credit Union offers the Nickel-Back checking account, which has no monthly fee or minimum balance, but requires direct deposit. Customers earn 5 cents for each debit card transaction. 881-6262.

• Online banks

All three of these online banks offer fee-free checking with no minimum balance. And Capital One 360 and Ally Bank's checking accounts earn interest.

Capital One 360 (formerly ING Direct), home.capitalone360.com

Ally Bank, www.ally.com

PerkStreet, www.perkstreet.com

Star reporter Angela Pittenger, our Centsible Mom, shares tips, ideas and news about how Tucson consumers can find value and stretch their budgets. Send suggestions, ideas or questions to her at apitteng@azstarnet.com or 573-4137. Plus, join the discussion with Pittenger on her blog, at azstarnet.com/centsiblemom, where she shares her progress in trying to save more money this year for her family.

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