Bank Fees. Only the beginning…

Now that it’s official and Bank of America has retreated from its plans to introduce a monthly debit card fee, we must also be prepared for the more nuanced approach that many banks will no doubt take in response to the consumer backlash we have witnessed since the debit card fees were announced. The major banks have two constituencies they must answer to: their customers, who have quite obviously made their voices heard, and also shareholders, who will not be satisfied if and when bank profits and dividends are reduced due to loss of billions of dollars in fee income. Heck, Bank of America’s stock price this year looks like the EKG of a dying man…

Chart courtesy of Yahoo Finance

With that in mind, there are several things to watch for in the months ahead. Introducing a new and controversial debit card fee resulted in considerable press coverage and sparked a broad customer protest. But tweaking existing fees may not immediately appear on the radar screen. Some areas to watch:

1. Account maintenance fees. According to these fees typically range from $7-$10 per month and on some accounts may be as high as $30! When you are thinking about bank fees, always think in terms of the annual amount. That $10 fee is $120 out of your pocket every year. That’s a lot of meals or gallons of gas or money that could be saved and thus working for you. This fee is simply the cost of keeping your money in a bank checking account. Unfortunately the days of truly free checking are over, and these fees have been rising steadily, so you can expect to see gradual increases creep in.
2. Increasing minimum balance requirements. Watch carefully as banks ramp up the minimum balance required to avoid certain fees. If some cases, if you did below the minimum for even a day, that could trigger a fee for the entire month, so monitor your balance carefully.
3. Fees for mobile banking apps. That great new app your bank rolled out to make it convenient to bank via your smartphone just might trigger a monthly fee. The cost of convenience!
4. Credit card fees. While legislation has placed new restrictions on credit card terms and conditions, the annual fees for credit cards are now back and are on the rise. Cash advance fees are also rising, and some are already as high as 5% and with no cap! Ouch! That’s an expensive short-term loan!
5. Overdraft fees. Like credit cards, these fees have been the subject of new regulations, but that didn’t make them disappear. At $25-$45 per infraction, a minor mistake can easily become a huge drain on your account.
6. ATM fees. I hate these things! As covered in previous posts, consider these fees as a percentage of any cash withdrawal. Paying a $3 fee to withdraw $20 is a hefty 15% fee to access your own money! Stay within your bank’s own network to avoid even larger charges.

Considering the wide variety of fees that are already out there and the many others that will undoubtedly surface in order to replace lost income, you can easily see why I refer to bank fees as “unconscious spending.”

Finally, I have to share a really funny post from humorist Andy Borowitz, who was among the first to help Bank of America get the word out about cancelling the planned debit card fee. The bank’s shocking announcement on the debit card fee issue.

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