As a result of the bubble burst of recent years, if you still think the bank is your friend, chances are your thinking has changed. With profits down and new rules limiting the ways that banks can make money, the nation’s biggest banks are rolling out new fees for their clients. Bank of America plans to start charging a new $5 monthly fee for using debit cards for in store purchases. Citigroup will charge customers a $10 monthly fee for all account balances below $1,500. Wells Fargo, Chase, Regions Financial and SunTrust are also testing out similar debit card fees. Additionally, many banks no longer offer free checking accounts. Consumers should be cautious of what banks they’re using as new fees will be introduced in the near term. Consumers should prepare to pay fees for such things as, ATM use, requesting a paper statement, writing too many checks, or even the use of a teller.
In an article written by Tierney Sneed, entitled Are Debit Card Fees Out of Control? she says, “Some banking industry members are blaming the new fees on the Frank-Dodd Act, arguing the regulations being placed on banks by the legislation require them to find new ways to bring in revenue. Nevertheless, customers are livid at the new charges, especially as they seem to be aimed at lower-income users.”
Its no surprise that Bank of America would be the one to lead this movement. Considering their loss of roughly $6 billion dollars this year alone. Additionally, their sub-par lending practices during the housing bubble have sealed their fate and that of their investors. Bank of America is rolling out some of the biggest new fees in the wake of the housing bubble bust. The good news is that not all banks plan to add new fees. If you are able to carefully organize your money, review your monthly statements and stay in tune with your bank’s rules and regulations, you very well may avoid these and other upcoming fees.
- Know your bank’s rules
For anyone who banks with Bank of America, you should be aware of how this new debit card fee works. If you only use your debit card for ATM withdrawals, you will avoid this proposed fee. However, if you make an in store purchase using your debit card as your payment method, and your total account balance is below $20,000, you will be assessed a fee. A good way to avoid this charge is to use your debit card at the ATM and elect credit card use at the local store. Otherwise, we suggest you pay in cash.
At this stage, most banks are simply “testing” out the new fees. However, if the majority of their clients voice their dissatisfaction and refusal, chances are the bank will hopefully listen. The notion is that the bank will likely wish to retain their existing customers and prevent a loss of existing accounts and their client’s money.
- Accept the loss of certain privileges
These new rules are mainly focused at gaining control over their existing customers and slowly recuperate their losses. The banking industry is changing their practices largely as a result of the real estate and loan meltdown of recent years. A consumer’s ability to secure a real estate loan in today’s market is far more difficult and qualifying standards have become far more stringent. As a result, far fewer consumers qualify for the same loan that was extremely easy to qualify for in the past. Another element which will likely be disappearing in the near term, is the reward programs and banking incentives.
- Don’t chase offers
Most banks love to throw out give aways to new clients like free Ipads, Ipods, movie or disneyland tickets. Resist this marketing tactic and these offers. Take a close look at the true benefit of opening a new account and read the fine print.
- Find a better bank
Do your research early. As we mentioned, don’t be afraid to ask your bank representative direct questions regarding their fees, anticipated changes, hidden account fees and the like, prior to selecting a bank or making a move. We believe that not all banks will decide to impose those new fees and some may elect to avoid their implantation altogether. Smaller local banks and credit unions may be a better choice for most smaller account. After all, you should know your options and take advantage of either changing banks or negotiating the terms with your current one.
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