Our family received a letter from a major U.S. bank where we maintain a few basic checking accounts. The letter kindly explained that these previously free, no-frills accounts would begin charging a fee of $8.95 per account per month. Of course, this fee could be waived if I was willing to use a debit card ten to twelve times per day between 2:00 and 2:15pm while standing on one leg or an array of other borderline circus acts.
While I’m exaggerating somewhat for effect, the bottom line was two small checking accounts were on the verge of costing over $200 per year just for the privilege. I had heard similar stories from clients and friends at other banks and thought that perhaps there was nothing that could be done. Agreeing with 72% of those polled in a recent Bankrate.com survey that asked if people would change banks if fees increased, I decided that the cost was enough to survey what else was out there.
So, in the search for a better bank account, is there an answer?
Fortunately, there is.
Depending on your needs, there are a number of options that might work for you. I should say first that, if you are already performing the tasks they require to qualify for the free account, then your best bet is likely to stay put, especially if you have a good relationship with the bankers at your branch. Failing that, there are two primary places to go based on your particular needs.
Small, local banks and credit unions
Much of the income the larger banks are looking to make up came in the form of fairly high stakes investing on their part. The rules allowing them to participate in such activities have become much stricter and, as a result, we all feel some of the pain. Your local community bank or credit union was unlikely to have participated in this kind of activity to begin with and can therefore afford to continue the same basic account services without a lot of extra fees.
Most of these institutions now have the same technology as their larger counterparts in terms of online bill pay and mobile services. Many have also eliminated the concern about their lack of branches and costly ATM transactions by either participating in a network of ATMs where you can withdraw money fee-free or they will reimburse your ATM fees up to a certain amount each month.
If your needs aren’t that complicated and you are comfortable doing your banking without the brick and mortar branch or looking the teller in the eye, consider some of the more well-known online banks out there. These institutions keep costs low by not having to pay for all those branches and some still offer – GASP! – interest bearing checking accounts, albeit at a fairly paltry rate. Most have similar plans in place as the local banks in terms of making it as easy as possible for customers to use ATMs, deposit money via mail, and mobile.
There’s still no such thing as a free lunch. It can be a hassle and a time drain to change banks. Transcribing online bill pay payees, ordering new checks, notifying direct deposit or automatic payment vendors are just a few of the hoops you have to jump through to make a move. The banks know this and upping their fees is their way of betting that you won’t make a move. If you take the steps in advance to select the bank that is the best fit for you, it will be well worth the effort and save you money, stress and time in the long run.
Chip Workman, CFP®, MBA
The Asset Advisory Group