How to avoid new checking account fees
Wells Fargo is introducing a checking account fee in more states, and you can expect similar behavior from other big banks.
This post comes from Jeanine Skowronski at partner site MainStreet.
In both instances, the fees in question aren't entirely new. Wells' Essentials Checking Account, which costs $7 a month, was rolled out in several other states last year, and Bank of America has been testing monthly fees on checking accounts in Arizona, Georgia and Massachusetts since January 2011.
But they're also not likely to be the last new or raised checking account fees introduced in 2012. Big banks are still looking for ways to recoup funds lost to interchange fee limits that went into effect back in October, and there's already a new threat to traditional revenue streams on the horizon. The Consumer Financial Protection Bureau announced just last month that it is looking into overdraft practices, which netted banks $29.5 billion last year.
The regulatory changes, past and present, have led most major banks to widen their tiered checking account options, which waive fees and offer bigger rewards if customers sign up for more services.
The Wells Essential Checking account, for instance, allows customers to bypass the $7 fee by maintaining a $1,500 minimum daily balance or making direct deposits of $500 or more each month. It also allows account holders to get a $2 discount on the fee if they opt for online statements.
"What's important to note is that most customers will experience little impact, as they already have the required minimum balance or direct deposit in place to waive the monthly service fee," a spokeswoman for Wells Fargo says.
Fortunately for consumers, the ways to waive these fees are fairly similar across the board. As such, here are some steps you can take now to make sure you're not hit with big checking account fees in the future.
Set up direct deposit. As with using a prepaid debit card, the easiest way customers who have a hard time maintaining minimums can bypass monthly fees is to link their paycheck or another direct deposit to their checking account.
Do your banking online. The second simplest way to avoid these fees is to get in the habit of doing your banking online. Wells Fargo is offering a discount for those who opt out of getting paper statements, while Bank of America is allowing new customers to avoid all service fees by switching over to electronic banking, which includes free electronic billing. You can expect other financial institutions to reward customers for doing things digitally as each widens its mobile banking capabilities.
Get a credit card with the bank you have your money with. Bank of America will waive checking account fees if a customer has one of its credit cards, and financial institutions are generally moving toward not just lowering fees but also offering better incentives to customers who apply for their other financial services and products. You can also consider moving your money to a financial institution you already have a loan or other investments with.
Chase, for instance, offers additional rewards points and lower interest rates on existing loans for customers who have checking accounts with it.
A similar setup exists at Citi, whose customers can bypass the $30 monthly service fee on its CitiGold account if they have $50,000 or more for all linked deposit and retirement accounts, or $100,000 or more across all their eligible linked Citi accounts, including investments and loan balances but excluding mortgage balances.
CitiGold offers, among other things, preferred interest rates on certain deposit products, discounts for foreign currency transactions and safe-deposit boxes, customer service perks and waived fees for overdraft protection and non-Citibank ATM usage.
More on MainStreet and MSN Money:
This is the last straw for me. I am moving my checking from Wellsfargo to OneNevada, our local credit union. I moved my savings a month ago, but kept the checking with Wells because I figured they would get the message. What was I thinking? My local credit union offers far better loan rates, savings rates, and is member owned. As an account holder I own shares of the bank and receive internal business meeting minutes and vote on major changes in the bank.
Not sure why more folks don't start member owned credit unions like they did in my area. The time is right to kick these banks out of business.
Has it occurred to anyone that the banks and other corporations keep needing to raise more cash because they're paying their executive officers too much, or just maybe, these idiots should realize that maybe they need to cut back on their expenses and/or their growth plans?
Why are customers being made to pay for their greed? Customers pay for every second of air time used by corporations to peddle their wares. We feed into this by demanding so much personalization for products, most notably represented by automobiles, that we willingly agree to unreal prices to "have it our way" rather than have fewer car models that would cost less to develop, manufacture and sell.
Technology and convenience are both fine, but to shove it down your throat and make you pay for the development, advertising, fancy packaging, cross-country shipping of parts several times to complete a single product, fancy multiple locations constructed to present the product, and mass mailings to entice you into stores to purchase the product.
We're all acting irresponsibly, and we all blame the other party. STOP USING THE PRODUCT!
Go the credit union route, as Brian Kohn and Arisha Nasir have recommended. Better rates, and free checking in many, if not most, cases. The credit card rate at mine is 8.99%. I can probably do better if I look around. They did institute a checking fee, though I have enough on deposit to get that waived.
But compare all the CUs you're eligible to use. (There are probably more than you thought, due to relaxed membership requirements the last few years. My area has 17, most of which I think I'm eligible for.)
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