Bank Transfer Day

                                                

Banks are increasing ATM fees at an astronomical rate and are reducing or eliminating free checking accounts.  Bankrate.com stated ATM surcharges for non-bank ATMs – fee charged by a bank outside of your network, increased up 4% for the eight straight year and is now $2.50. The fee your bank charges to use another bank's ATM increased 11%. The cost to use an ATM that is outside of your network can be as high as $5 per ATM use.  One out-of-network ATM transaction per month is $60 per year. As a result Bank Transfer Day was established on November 5^th.

Banks provide ATMs for free to their customers and cover those costs by charging consumers who use out of network machines.  However, consumers are getting wiser and have reduced usage of out-of-network ATMs so banks are trying to make up for lost revenue. Three of the biggest banks:  Wells Fargo, Bank of America and Citigroup lost a combined 1.5% of deposits last year because of customers switching banks.

According to Bankrate.com only 39% of non-interest checking accounts are free of charge to all customers.  The banking industry has lost income due to regulation changes such as limits on overdraft fees and a reduction in debit card swipe fees.  As a result banks have reduced the number of free checking accounts available to consumers. Banks now only provide free checking accounts to preferred customers who have direct deposit accounts or a specific minimum balance. 

Wells Fargo has phased out its free checking accounts. They now charge a monthly fee for checking accounts plus a fee for online or paper statements.  Preferred customers who maintain a daily minimum balance of $1,500 or with direct deposits of at least $500 per month can avoid paying these fees.  Some banks charge an extra NSF fee if overdrafts are not repaid within a certain timeframe. Bank of America recently mailed customers notification that starting November 1, 2013 they will be charged fees for certain accounts and increase fees for other accounts. Here are 11 tips for save money on bank account fees. 

1. Switch banks. Comparison shop to find a bank with little to no fees. Consider switching to a credit union. Also consider using online checking accounts such as ING Direct, EverBank offers, Charles Schwab and FNBO Direct that do not require a minimum balance to open or fees.
2. Compare.  If you write a lot of checks shop around. Some banks charge $24 or more for a box of 200 checks.  You can get the same amount for as low as $10 by ordering directly from the printer or check writing company.
3. Get overdraft protection. Verify the terms and conditions of the overdraft protection including verification that you get at 30 days to repay the overdraft.
4. Ask about discounts or about specials.  Periodically check with your bank to see if there are discounts, specials or better terms available.  If you have been a customer at least 1 year remind the company of your loyalty.
5. Get cash back.  To avoid ATM surcharges get cash back when you make a purchase with your debit card.
6. Invest in your bank.  Ask about offers for shareholders.  If your bank offers them purchase at least one share to get notification about special deals and discounts. 
7. Limit interactions.  Limit in-person bank transactions and ATM visits.  Some banks offer no-fee checking accounts if you do all your banking via ATMs. If you must visit a teller, make sure it's for a transaction that you couldn't perform at an ATM; otherwise you'll be charged a fee. Some banks may offer low-fee checking if you have 10 or fewer transactions a month, including checks, debit card purchases and ATM withdrawals.
8. What is “free”. Find out what “free” means.  Most banks offer free checking if you maintain a balance of at least $500 to $2,500 in a low or no-interest account.
9. Link your accounts.  Avoid hidden fees by linking other accounts.  Link a CD to a checking account or link a savings account to a checking account to satisfy the minimum balance requirement.  This only works if your bank treats the money in all your accounts as one combined balance.
10. Read the fine print. Read the financial disclosure provided when you opened your bank account and periodically check the banks’ website for any updates or changes to the terms and conditions for your account.
11. Calculate. Review your monthly bank statements for the past twelve months. Calculate the monthly fees you incurred during the past twelve months. Calculate your total bank balance for the past twelve months. If the total fees incurred during the past twelve is more than 1% of your total bank balance for the past twelve months you are paying too much in bank fees. You can also calculate your monthly balance versus your monthly bank fees charged. If you have $100 in your bank account left over each month and pay $20 (20%) in fees each month you are paying too much.

 

Bank of America

In my article entitled, “Are Debit Cards Dead” on my blog on September 16, 2011, I mentioned that some banks would increase their ATM and other fees to $5 due to the changes from the Dodd-Frank Act. No matter how much money a company makes or losses they still find a way to pay their executives millions of dollars a year, so why can’t they pay their debt and manage their money better.

Free checking at some banks such as Bank of America will be eliminated. TD Bank still offer debit cards. Some banks have eliminated or reduced debit card rewards programs. Chase, SunTrust, Continental and United ended their debit card rewards program. Other banks charge business owners a fee when using a business debit card. Bank of America will begin charging customers that use debit cards a $5 monthly fee regardless of the number of purchases made starting early next year.

Debit cards are good because:
• Prevents consumers with bad credit from overspending
• Yu don't have to carry cash, a checkbook or traveler's checks with you
• They are accepted at many locations
• Is easier to obtain than a credit card
• You don’t have to show identification or give personal information at the time of the transaction
• Returning goods or canceling services treated the same as cash
• Avoid finance, interest charges and late fees
• May get perks such cash back rebates, airline miles, etc.
Debit cards are bad because:
• There is no grace period
• Some banks may charge a fee for using a check card as a debit card
• Transactions are verified to see if there are adequate funds
• Some banks process debit charges although insufficient funds are in the account and you will be charged $30 for every transaction that occurs when the account is overdrawn
• May not be accepted by some merchants unless it has a Visa or MasterCard logo
• May place a hold on your debit card for more than the cost of the purchase
• Provides less protection for purchases but you may dispute unauthorized charges or other mistakes within 60 days.

In my article entitled, “Do You Have Swipeitis” on my blog on July 7, 2011, I mentioned that we are addicted to using our debit cards. Here are 13 alternatives to make purchases without using a debit card.

1. Create a budget. Create a budget to track your spending daily or weekly. Set aside a specific amount for extra things you want. One reach that amount don’t spend anymore.
2. Pay your bills first. Pay your bills first. Put a portion of any extra money left over in a savings account.
3. Switch banks. Switch to another bank that has little to no fees.
4. Alternate payment. Write checks, get money orders or cashier’s checks, and use automatic paycheck deduction or online banking to pay bills.
5. Credit union. Switch to a credit union which generally offers the same products and charge lower fees.
6. Pay with cash. Go to the bank or ATM and take out the amount of cash you need for the week. Once you spend that amount don’t withdraw any additional money unless it is an emergency.
7. Use prepaid debit cards. Use prepaid debit cards to make purchases.
8. Local branch. Go to your local branch and make transactions.
9. Get a receipt. Get a receipt each time you make a purchase and keep it.
10. Track spending. Take all of your receipts from your debit card purchases and put them in an envelope. At the end of each week add up the receipts to see how much you spent. Use pen and paper, an Excel spreadsheet or Mint.com.
11. Wait. Wait a few days before making a purchase. Go back to the store to see if you still want the item. If you still want the item, comparison shop to see which store offers the best price.
12. Impulse Shopping. Avoid shopping when you are emotional. This will prevent you from spending more than you have or buying unnecessary items.
13. Leave at home. Leave your debit card at home unless you know you will make a purchase. This helps to reduce the temptation to make an unnecessary purchase.

The best way to send a message to Bank of America that you are not happy with the new debit card policy is by switching to another bank.

The CARD Act and Debit Cards

The CARD Act that went into effective on February 22, 2010 has resulted hundreds of changes to credit cards but did you know that the CARD also affects debit cards? Well here are some changes about debit cards you should know about. These new changes implemented by the Federal Reserve go into effect on July 1, 2010. Your bank should be sending you very soon an explanation of their new overdraft services including fees and changes.

Currently, for standard overdraft services your bank will cover the transaction by charging a flat fee of $20-$30 each time you overdraw your account (bounce a check or use your debit card).

If you have an overdraft protection account or service your bank provides a line of credit that is linked to your savings account to cover transactions when you overdraw your account. Banks charge a fee each time you overdraw your account but using the overdraft protection service may be less expensive than using the standard overdraft service.

Under the CARD act, your bank can no longer charge overdraft fees. Your bank must get permission to apply the standard overdraft services to debit and ATM card transactions. You can grant permission by opting in to the overdraft notice your bank sends you.

For existing accounts if you do not opt-in by August 15, 2010, your bank's standard overdraft services won't apply to your debit and ATM transactions and future transactions will be declined when you don't have enough money in your account, and you will not be charged an overdraft fee.

For new accounts opened on or after July 1, 2010, your bank can no longer charge overdraft fees for debit and ATM transactions unless you opt-in. If you open a new account before July 1, 2010 your bank will consider you an existing customer and you will receive a notice about your bank's overdraft services.

Determine if you want the standard overdraft services for debit and ATM transactions. If you decide to opt-in you can cancel at any time. If you do not opt-in before the deadline you can opt-in in the future.

The new overdraft guidelines do not affect checks or automatic bill payments. Your bank may automatically enroll you in their standard overdraft services plan for these transactions. Contact your bank if you decide to cancel the standard overdraft service to verify what options are available.