Updated on 02.20.12

Don’t Tolerate These Four Fees (50/365)

Trent Hamm

One of the surest signs that it’s time to switch to a new bank comes when you examine your monthly statement and see a lot of unnecessary fees.

About a decade and a half ago, I was a customer of a large bank chain (Firstar) that was later swallowed up by an even larger bank chain (US Bank). Firstar had locations that were really convenient for me at the time, so I used them as my primary bank.

During the year or two before they were absorbed by US Bank, I noticed that there were fees popping up all over the place. A maintenance fee appeared and a minimum balance began to be applied to my checking account.

At the time, I thought this was normal. What I should have done, though, is taken my business a few blocks away to a smaller bank chain that wasn’t introducing such money-siphoning fees into their accounts. I did eventually do that, but it wasn’t until after Firstar had absorbed far more of my money than they ever should have.

Don't Tolerate These Four Fees (50/365)

“Monthly” fees. Check cashing fees. Account “maintenance” fees. Minimum balance fees. These are just four of the most common fees that I’ve seen or heard about from readers. Banks are constantly looking for creative ways to get a few more bucks in their pocket, and one way to do that is to constantly ding their customers with small fees charged for extremely questionable reasons.

Just $3 in fees a month adds up to $36 per year. Three years of this and you’re talking well over $100, particularly when you consider that money could be earning interest on your behalf.

This is basically a rip-off. They’re taking your money for no good reason, particularly when there are many banks out there that charge no such fees. Thankfully, there are a few things you can do to keep those fees out of your account.

The first step is to check your monthly bank statement. For many of you, that means using online banking and examining the transactions over the last few months as well as the statements found there. There are no monthly fees that should be acceptable on your normal checking or savings account.

If you find any fees, call your bank. Have your statement in front of you when you call them so you can refer to specifics.

When you call, be polite and calm. First, ask why these fees were applied to your account in the past month, then ask to have them waived. If the bank refuses to do so, ask if they have any account offerings that do not include these fees.

Politeness and calmness will get you much further than anger and passive-aggressiveness on the phone. Most of the time, you’re talking to a customer service representative that has heard a lot of anger today and isn’t getting paid well for the punishment they receive. They’re not exactly going to want to go the extra mile for people who react with anger.

If your bank won’t budge on the fees, it’s time to start seeking out another bank. Unless they are offering features that make up for the fees – and these features would have to be tremendous – these fees are costing you.

One thing I’ve noticed is that the bigger the bank, the more likely they are to sneak in such fees. This isn’t an exact rule, but I’ve found that the giant banks seem to be the ones that most commonly stick fees onto their accounts. I did a brief survey of some of my friends just to find out if they had found any fees on their accounts, and the ones who had found fees were universally customers of very large banks.

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere. Images courtesy of Brittany Lynne Photography, the proprietor of which is my “photography intern” for this project.

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  1. Riki says:

    So which four fees are we supposed to be avoiding?

  2. josh says:

    My best guess about this picture – the young man is calling a friend, asking if he can move in with them to avoid appearing in any more “photos” for this absurd series.

  3. Misha says:

    Now, see, I had expected that an article advising against accepting “these four fees” would do something better withn them than to bury them in the text – no bullet points, no numbering, not even your signature slap-dash bolding – indeed, the first thing I did with this article was skim it for the bold text to find out what the four verboten fees are. Way to bury the entire point of the article beneath a photo and devote bold text to actions best taken AFTER the fees have been identified!

  4. Johanna says:

    What is the difference between a “monthly” fee and an account “maintenance” fee?

  5. Gretchen says:

    Why would they budge on the fees? They probably gave you notice and, in the case of my credit union, are the ones that come with any sort of interest at all.

    I find the problem with smaller banks is that you are just waiting to get bought out by the larger banks.

  6. Gretchen says:

    Perhaps he’s calling the yellow neon to pick him up.

  7. tentaculistic says:

    This!! Immediately following its $20 Billion taxpayer bailout (and $4 Billion bonuses to the senior execs who drove it into the ground), Bank of America started really gouging its customers with a whole slew of fees – now it’s $12 per checking account, per month. Then they added a $5 fee for debit card use (which is bizarre – even with the cost of an electronic network, it saves them from having to have hard cash, tellers/ATM stockers, physical bank outlets). Last I heard, the $5 debit card fee was met with such outrage that they backed down. But not on the $12 fee. I called them and (very nicely!) asked how not to get the fee since we had signed on for free checking accounts – they basically told us to pound sand. We are in the middle of switching to a credit union, but it’s taking awhile on our end. There are few things in this world that make my blood pressure rise as reliably as Bank of America.

  8. Vanessa says:

    Glad I’m not the only one who was expecting the four fees in bold type.

    I don’t like fees, but I can’t bring myself to think that all fees are evil. I keep a minimum balance in my checking account to avoid the monthly fee, but even if I had to pay it, I think it would be worth it. Having access to a bank is such a valuable part of my finances, I don’t know what I would do without it. Like Gretchen said, banks give notice and I’ve learned to read ALL the correspondence my bank mails me. Most fees can be avoided if you keep up with your balance and with the changes your bank makes to your account.

    LOL at the paragraph instructing us on the proper way to speak to a customer service rep.

  9. David says:

    I was surprised to find no mention of overdraft fees. Typically, if you write a check for more money than is in your account, then as long as it isn’t absurdly too much more money the bank will honor the check and charge you $20 or so for the privilege. I should say, to avoid accusations of ugliness and bigotry, that the same thing happens in the United Kingdom also (except that the banks here will honour your cheque).

    Perhaps Trent never writes checks for more money than is in his bank account. But people who read The Simple Dollar for other reasons than yellow Neons might.

  10. Becky says:

    Don’t forget to check with some local credit unions about their fees. I am a member of 2 credit unions, and neither of them charge these kinds of piddly fees. They will tell you their fee structure straight up, and won’t change it without informing you first and explaining why.

    Credit unions exist for the benefit of their members (i.e. you). Banks exist for the benefit of their shareholders (i.e. not you, unless you own stock in the bank).

  11. Cheryl says:

    One local credit union started charging my mom a “maintenance fee” because she wasn’t moving any money in or out of the account. She closed the account and moved the money to her other bank account.

  12. Julia says:

    All banks have to disclose fees at account opening and also whenever the are increasing. Generally this is 3 months ahead of the fee so the customer can decide if they want to change banks.

  13. Alice says:

    I like the photo, visually interesting and shows someone making a phone call, which is mentioned in the post.

  14. Kai says:

    I use a bank whose chequing account charges a monthly fee that is waived with a minimum amount kept in the account. I always keep my account above the minimum, and treat that as cushion money. So if I screw something up badly, or need to pay for a minor emergency, I can still use the cushion money and just end up paying a couple of bucks as the monthly fee. (I haven’t actually had that happen, but my mind likes knowing the cushion is there.)

    Sure, I would prefer no monthly fee at all, but the account otherwise does what I need, and it has banks *everywhere*, both in my city and across Canada, so I never need to look hard, or use a third-party ATM. They also have the longest hours of any bank, and I can go most evenings and even some hours on weekends if needed. That level of convenience is worth it to me.

    I think there is value in recognising what you want out of a bank. For me, a small credit union with no fees but few locations and short hours wouldn’t be preferable.
    But then, in Canada, we also have the benefit of knowing our banks are all stable and reliable, so I don’t need to consider relative risks. I think that would be a big factor for me elsewhere.

  15. Mister E says:

    My bank has different tiers of account allowing a certain number of free transactions after a monthly fee.

    I used to have the unlimited account because I used to tend to move money around quite frequently in small amounts.

    That account is now $15 / month, waived with a 3,500 minimum monthly balance.

    I moved to ING which is free.

  16. Jackowick says:

    What’s with all the lurkers/haters recently?

  17. David says:

    They are all drunk, and have spent so much money that they can no longer afford an internet connection.

  18. AnnJo says:

    Sorry to be the bearer of bad tidings, but free banking services are not a human right or a Constitutionally guaranteed right. Why would anyone think they are entitled to the convenience of a checking account, with the incidental services (usually) of a debit card, prompt check clearing, online bill-paying, online transfers, email balance alerts, free check cashing, etc., all for free?

    It’s a commercial transaction. This entails you getting something and the bank getting something. Absolutely, look for the best deal available, but whining about not getting these services for free makes people sound like entitlement junkies and fools. Which, of course, plenty of people are.

  19. Baley says:

    #18 AnnJo: No, free banking services aren’t a right, but when other banks do offer them for free, why would we want to pay more? The bank is definitely getting something: it is holding my money and able to invest it to earn interest off of it, that they do not pass on to me (as a free checking account more than likely doesn’t earn interest). I’m all about letting banks compete to get my business, and right now I bank with one bank and one credit union, and both have excellent service, banking online (and several locations near me), free check cashing, online transfers, etc. It’s not too much to look around for free banking when the banks still benefit from holding my money.

  20. AnnJo says:

    #19, Baley, I have my accounts structured to avoid fees also. As I said, my gripe is not with anyone getting the best deal for themselves, but with the assumption of some, including Trent in this post, that there’s something inherently wrong and “unacceptable” if a bank does impose fees.

    Banks operate the same way grocery stores do – they structure their fees/prices so as to extract maximum dollars from inattentive/ignorant customers while keeping the business of more bargain-conscious customers. Banks do it with higher fees for low-balance accounts, fees for overdrafts, lower fees for credit customers who are paying interest on mortgages or HELOCs, etc., just as grocery stores do it with sales and coupons.

  21. Slccom says:

    If they weren’t loaning out our deposit money at a profit, I’d agree, AnnJo. However, they are getting us both coming and going.

  22. AnnJo says:

    Slccom, right, and what exactly is morally wrong with a business model that derives some of its revenue from fees charged for the service of maintaining a checking deposit account and some from loans made with those deposits, or, as you put it, “getting us both coming and going”? After all, deposit customers get a service and loan customers get a service. Is there some ethical principle that requires one set of customers to get their services for free?

    I just ran a quick stock screener on my brokerage website. Only 26 out of 592 (4%) commercial banks showed a net profit margin of more than 30%, and 83% showed a profit margin of under 5%. This compares to the general universe of stocks shown on my screener, with 6% reporting net profit margins of over 30% and only 53% under 5%.

    Banks are so “profitable” that millions of shareholders lost their entire investments in the failures of banks such as Washington Mutual, while depositors lost not a penny.

    If it weren’t so tragic it would be laughable how successfully politicians have demonized certain industries such as banking, insurance and energy in the minds of average citizens, when their profitability is not particularly better, and often worse than any other industry. Bank of America’s net profit margin is 1.3%, Microsoft’s is 33%, Apple’s is 24%, Starbucks is 11%. Who’s gouging the customer?

  23. Slccom says:

    AnnJo, the one thing that people never really forgive is change. When I was a kid the banks competed to give things away and get our money so that they could lend it and make money.

    Things changed. You are right; there is nothing morally wrong with the business model that you describe. Thank you for opening my eyes.

    It is just, darned it, that 1973 TV from the bank died in 2003 and I want another one of the same quality for free! It outlived two electric cords…

    Sigh. Times to change. And people will always grouse. And jump to banks that don’t charge fees as long as they are available.

  24. AnnJo says:

    Slccom, you’re right that people are not forgiving of change, but in fairness to banks, I think most of the changes in banking have been for the better. My first bank kept “banker’s hours” – I think it was 10 a.m. to 3 p.m. M-F. There was a monthly service fee, plus at some point a per-check fee. Your checking account statement would be mailed to you, but not your savings – for that you had to take your passbook in to the bank with you to have the teller record deposits and withdrawals. Of course there was no billpayer or online access and transfer or telephone balance checks, or ATMs, or drive-through windows, or any of that stuff.

    And I never even got a TV. I got a choice between an iron and a toaster, but that was it.

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