A recent WSJ story rounded up some of the more egregious bank fees, like the Citibank branch that takes 5% of the total when a child brings in a piggybank full of coins to deposit. (The bank actually said it planned on getting rid of the fee when a reporter inquired about it.) Bank of America, which earlier this year began testing checking accounts with a range of requirements (and monthly fees from $6 to $25), still has one free account option with no minimum balance. The only problem is that the account comes with e-banking only, and if a customer does anything dealing with a human in non-digital format—like making a deposit or withdrawal with a teller, or requesting a paper monthly statement—then a $8.95 fee kicks in. Overdraft protection, which charges the equivalent of a 1000% APR, and which studies have shown relatively few customers actually understand, is common at most banks.
For the most part, bank fees are assessed only when a customer does something (making a purchase with an overdrawn ATM card, taking out money from an unaffiliated ATM machine) or fails to do something (meeting the minimum balance requirement). A smart, disciplined consumer can mount defenses against these fees, so long as he understands the rules (which isn’t easy, considering that the typical checking account has 111 pages of disclosure) and stays on top of his spending and account balances (which isn’t easy, considering that nobody balances a checkbook anymore).
Defending yourself against fees is smart. But at some point, if you’re only playing defense, you’re bound to lose.
To increase your chances of winning—or at least not losing badly—it’s essential to launch a counteroffensive, which in this case means shopping around for a new bank with fewer gotcha fees and better overall terms.
However, the survey also found that it was often difficult for consumers to get clear information about banks’ fees, so be prepared to do some digging. Pay attention to the terms. You may qualify for free checking if you sign up for direct deposit of your paycheck, or use your debit card a certain number of times each month.
Some of these terms may seem like hassles—and they are. So pick an account with the most agreeable terms. Be realistic, and don’t be sucked in by any “amazing” intro offer for new customers. Instead, focus on the fees, which add up quickly, and the terms you can most easily meet to avoid paying those fees.
Most often, the best terms are available from credit unions and small banks, which routinely cream the big banks in customer satisfaction surveys, and online banks, in which you typically sacrifice the in-person brick-and-mortar experience in exchange for fewer fees and better (or any) returns on the money in your accounts. The WSJ recommends online banks because customers will never get hit with fees for using ATMs:
Online banks, such as State Farm Bank, Ally Bank and Charles Schwab Bank, refund all ATM fees at the end of the month since they typically don’t have their own ATMs.
And USA Today highlights another online bank for its customer-friendly checking account policies:
ING Direct, which has no bricks-and-mortar branches, offers a free checking account with no minimum balance requirement.
The bottom line is that if you’re offended by bank fees, do something about it. Get on the offense.