Special Report
One thing that I learned when I first became an adult was that drug dealers and bankers have the same business model. The big banks sent me credit cards and they were free to use. They had no fees to use them or to borrow money from them. Then they sent me a bank card. I could go to any ATM and use them for free. My checking account was free. Just as I started getting use to using these services, the banks started charging me. If I were still at these institutions, I would be paying out money for nothing every year.
Well I am no junkie and I sure am not addicted to bank services. I use the least expensive bank services that I need. As of this writing, I do not have a bank card because I don’t need to use one. I use a VISA card instead. I pay off my card every month. This helps me keep track of my spending. It also allows me to accumulate points to exchange for cash. I have direct deposit into my checking account. This allows me to get a free checking account. My bills are paid for free out of my checking account initiated by the bank or by the business charging me for the product or service. I do nothing to pay my bills. The bank and businesses pay my bills for me out of my checking account. I pay nothing because I took the time to shop around for the bank services that I need. If I have to deal with cash, I go to the bank and withdraw the cash. So my banking charges come to zero every year. I pay about $2.00 for Post Office mailing expenses per year.
Most people cannot say that because they are bank junkies. Here is the reason why. Most people who know little or nothing about banking bank at the largest banks that they can find. They think that the large banks are the safest banks. Many bank at their bank because their parents banked at that institution. So they look out for the banks interest instead of their interest.
Bankrate.com says, “While free checking is in decline, more accounts have introduced waivers to avoid monthly fees, McBride says. Last year, 88 percent of noninterest accounts were either free or could become free if the customer signed up for direct deposit. This year, the number is 92 percent, which shows banks are still willing to offer checking for free in exchange for a deeper relationship with customers.”
“In Bankrate's annual survey, the average account maintenance fee rose from $2.49 last year to $4.37 this year, an increase of 85 percent.”
“That adds up to about $52.44 a year, an amount that isn't going to break the bank but might surprise people accustomed to free checking, McBride says.”
“With so much change going on with checking, watch your statement for new fees such as "account maintenance fees," "monthly service charges" or "monthly service fees," McBride says.”
“Maintenance fees on debit card accounts aren't yet common; so many people may not even know to scrutinize their bank statements for them. At this point, only 4 percent of accounts charge a point-of-sale fee when using a debit card, and less than 2 percent charge a monthly or annual fee for carrying a debit card. But that's expected to change in the new regulatory environment, McBride says.”
"The Durbin Amendment is really a game changer on the debit card front. And I think, in addition to continued declines in the prevalence of free checking, we will see an increase in debit card fees, whether it's a fee to carry the card or it's a transaction-based fee, McBride says.”
“If your bank begins charging a debit card fee and you don't want to move your checking account, you can always go back to carrying a credit card. As long as you pay off your balance every month, credit cards can have advantages over debit cards such as rewards programs and better protection from fraud liability.” This is what I do and I pay nothing in fees.
Banks have hurdles that allow you to get around paying fees. But these hurtles are rapidly getting higher as banks attempt to increase fee revenue. “The average minimum balance required to avoid a monthly fee rose from $249 in 2010 to $585 this year, an increase of nearly 135 percent.” says Bankrate.com.
"The big increases in balance requirements and fees aren't just from banks that already have those raising them, it's also from those that didn't use to have a balance requirement or a fee now instituting one," McBride says.
“If you think your checking account has become too expensive, shop around for a better deal,” McBride says. “Competition is still stiff in the banking industry, and many different banks, credit unions, and community banks may offer checking accounts that are much cheaper than your current account. Another alternative is an online bank.”
In this year's Bankrate's Annual Survey; Checking Survey section, ATM surcharges hit an all-time high for the seventh consecutive time. Last year, the average charge was $2.33. This year, it's $2.40. That's an increase of 7 cents, or about 3 percent. "The ATM surcharge is almost universal, and it's been that way for years," says McBride.
Bankrate.com says, “If you have a Smartphone, such as an iPhone or a BlackBerry, try pulling up a banking application before you use another bank's ATM. Many bank Smartphone apps can use your phone's GPS functionality to locate in-network ATMs near you. Walking or driving a few blocks may save you the fee charged by the other bank's ATM and the out-of-network fee your own bank will charge, easily amounting to $5 or more.”
“If you want to earn interest on your checking account balance, and you tend to make a lot of debit card transactions, you might want to look into high-interest checking accounts”., McBride says. “Mostly offered by small banks, credit unions and online banks, high-interest checking accounts can pay more than 1 percent on deposits.”
If you make a mistake and make a purchase with a check or debit card your balance won't cover, you'll pay more than before to cover your mistake.
According to Bankrate.com, “Like ATM fees, overdraft fees tend to rise at or near the rate of inflation, and this year is no exception. The average nonsufficient funds, or NSF, fee rose 1 percent, from $30.47 last year to a record $30.83 this year.”
“Thanks to the Fed's Regulation E, which forces banks to get a customer's opt-in before charging him or her overdraft fee for a debit purchase, it's easier to avoid overdrafts.”
“All you have to do to avoid overdraft charges is refuse to opt in. That way, if you don't have enough money to cover a purchase, your card will simply be declined at the register and can't be used to complete the purchase while costing you a hefty fine.”
“Alternatively, many banks allow you to set up a linkage between a savings account or line of credit and your checking account, allowing you to tap them if you don't have the cash to cover a purchase.”
