10 Reasons Your Bank Never Wanted You to Read This

Michael Bowler | RSS | Wed, May 13 2009 | 7 Comments

1. The banks are really in survival mode, but they will never admit it.

I recently switched banks. Every single bank I walked into told me they were in good shape. Wow. In an economy that caused some people to commit suicide, every bank in Maryland was in good shape? Amazing! I did a little research and I found out that all but one were lying through their window bars. I started with Wachovia. The account management official told me that Wachovia was in great shape and ahead of the game. (I researched that claim and found out they had recently obtained a bank in the west coast that came with millions of dollars worth of sub prime mortgages and were currently in negotiations with Wells Fargo before collapsing.)

I walked into First Mariner Bank, local to Maryland, and found one teller who was bored out of her mind playing pin-the-tail-on-my-text-messages, so I walked right back out. When I walked into Provident Bank, also local here, there were boxes on desks and I was told they were bought by M&T Bank, also a local bank and sponsor of the Baltimore Ravens. The courtesy Ravens stadium blanket they give you for starting a checking and savings account is folded up in my dresser at home. I was so impressed there I switched my business accounts over too.

2. This is only the beginning of inflated fees.

If you are anything like me, you have gotten more notices than ever from your bank, often included in your statement envelope, about “changes to your account.” Those changes are fees, my friends. The fee you pay for an overdraft is likely at least $35. If you are part of the majority of bank clientele, you are flirting with $40. It is likely that your free account has been changed to “basic”, which secretly comes with fees. Your savings account fee for a low balance has changed from $3 to $5, or, like my last bank, from $11 to $15. (Now you see why I decided to leave.)

3. Interest rates change constantly.

If you are anything like the majority of consumers, the interest rate on your savings account has gone down, and any adjustable rate loan you are paying has adjusted you into poverty. Whether or not you have done anything wrong, you can have impeccible credit and one day receive a notice that your APR has gone from, say, 12% to 27% and your only option is to cancel the card and pay it off at the old rate. (President Obama has begun to rally against unfairly changing rates.)

4. If you’re not a student, your bank doesn’t care.

College campuses are a gold mine for banks. Some students have the option of getting student IDs that double as debit cards, courtesy of bank that is really hoping a few plastic spenders will have a few overdraft fees. Do you spend responsibly? Was your last overdraft 22 years ago when they called it “bouncing a check?” Your bank hates you. You make them a maximum of 3% of the money you put in your savings account and nothing on your checking account because they cannot invest it and have to leave it available to cover checks. You aren’t even worth the free checks anymore.

5. In debt? The courts will not help you.

Have you ever signed an “arbitration agreement?” I signed one a couple of years ago when I took out a small loan. What it does it mean? Well, it means you cannot sue, for any reason. If they raise your rates, charge you early, or do anything, you must see their arbitration mediator that is in their pocket. Even identity theft victims find themselves subject to arbitration agreements that make their situation three times worse than a stolen identity. You can find a lawyer, but you will be reduced comic relief that lightened his day.

6. Your bank is more excited about your trip to London than you are.

If you use a foreign ATM, your bank alone (not counting the foreign bank) will charge you upwards of $7 for a foreign currency transaction and using a competitor’s ATM. Visa and Mastercard charge 1% of the transaction for converting currency. Check and see if any of your cards, for instance, Capital One, waives the foreign currency fee. Also check and see if your bank has an agreement with a foreign bank it has good relations with to waive customary fees.

7. For all the fine print, banks sure leave a lot of things out. Everything you should really know is nowhere to be found.

Banks hand you all sorts of meaningless paperwork with lots of fine print. The Government Accountability Office sent investigators around to many banks to test their information disclosure. One-third of them failed the test, leaving out information altogether or informing the person after ten minutes and with a little prodding. More than half did not disclose information on their websites or brochures. Consumers just have no idea what they are signing up for until two years later when they are at home receiving letters that make them use four-letter words.

8. Your money is better off anywhere else, maybe even under your mattress.

Banks offer savings accounts, CDs, IRAs — all sorts of ways to invest your money. Unfortunately, most savings accounts offer no more than .5% interest. Even in this economy, you can find places as high as 3% to put your money. I wouldn’t mind multiplying my interest by five, would you?

9. When it comes to banks, smaller is better.

I am part of a small bank. After five years with a semi-national bank and a year with a regional bank, I decided that smaller banks were the right way to go due to more personalized service, lower fees, and higher interest rates. I was right. Even though larger, nationalized banks have more convenience and more ATMs to choose from, they make 54% of their revenue from fees while smaller banks make 28%. Also with low overhead, they can offer higher interest rates for interest baring accounts and lower maintenance and problematic fees. Somehow with low fees and higher interest rates, my bank still has enough money to sponsor the Baltimore Ravens — so much so that the Ravens’ stadium is named M&T Bank Stadium.

10. Your online account information is probably inaccurate.

If you are like me, you used your bank card to buy gas, sent two checks out in the mail and deposited a check in your account, all of which are currently pending. With a good online account system, that gas purchase is holding for $1.00 and will only show the true amount when it posts. Let’s say your balance before those transactions is $1,219.48. (I’m making these figures up.) You just bought $45.28 of gas for your Ford Expedition at Exxon. You went to Wal-Mart and bought $62.48 worth of hair care products, office supplies and clothing. You stopped at the post office and sent out a $65.72 cell phone payment and an $800 payment for rent. Before arriving at home, you deposited a $600 check. You just checked your bank information online like you do every couple of days and it said you have $1,218.48 in the bank. You liked how that looked so you bought a $350 Pez dispenser on eBay.

Oops. Your gas held for $1.00 if you’re lucky. If you keep your checkbook accurate, you know that your balance before the deposit, which will probably post last, was $246.00 and you wouldn’t have bought that pez dispenser until the deposit cleared. You will likely overdraw and a $38 fee will come out of that deposit when it posts, leaving you only with $458. It is a good idea to check your online statement, daily if possible, to safeguard yourself from identity theft, but keep your checkbook accurate and spend from that balance, not your online balance.

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Things you can do to minimize your bank fees
Do You Really Need to Open a Swiss Bank Account Online?
Bank of America reduces overdraft fees: Opting out is now an option!

Tags: overdraft, fees, Investing

Cash or Charge?

Jennifer McClelland | RSS | Mon, Nov 24 2008 | 0 Comments

I read an article over at Yahoo today that said more people are using old fashioned cash instead of credit cards for everyday purchases. In my opinion, maybe some people should carry cash to keep them from spending more than they wanted to, maxing out credit cards, or even getting some harsh overdraft fees from the bank…

At the same time, I don’t carry cash, I can’t carry cash. When I have any cash on me (more than $20) I don’t feel safe. And if someone were to take my cash from me, there is no way to get it back…there is no protection associated with cash, unlike credit cards or most Visa or MasterCard backed debit cards, which can get your money back if your card is stolen or a charge shows up that can be disputed.

If you are going to be using cash for now, be careful, because there are stories coming out about how customers aren’t using cards anymore and I’m sure this will lead to some unsavory behavior by some members of society.

Related posts:
The Fed says that banks need to get customer consent before imposing overdraft fees
Bank of America reduces overdraft fees: Opting out is now an option!

Tags: fees, spending, protection