Ten Ways That Banks Rob You Blind
By Scott Reeves Jul 06, 2009 1:43 pm
With a little planning, you can avoid most of these hidden charges.
Charges -- including late fees, overdraft charges, and loan-origination costs -- now generate about half the banking industry’s income. A bounced check can cost as much as $30 at some banks. Then come new credit-card fees.
Major banks such as JPMorgan Chase (JPM), Wells Fargo (WFC), and Bank of America (BAC) offer the convenience of easy-to-find branches and an extensive ATM network. But regional banks such as The Apple Bank for Savings or M&T Bank (MTB) may offer a better deal to individuals. Shop around.
Planning and good money-management practices can help you avoid most fees. Here’s what you need to know:
1. Credit-card membership fees:
Competition killed most annual credit-card membership fees. But like zombies, the charges keep coming back. Remember that you’re not limited to a card issued by your bank. There’s no reason to pay a fee for a credit card, so shop around.
2. Credit-card transaction fees:Legislation kicking in next year limits late and over-limit fees on credit cards and the manner in which the fee is calculated on new and old balances. In the meantime, expect fees to increase until the new law goes into effect. Grace periods are likely to be restricted -- or even end. Read the disclosure statement.
3. Checking account fees:
Banks seem to think you should pay them for the privilege of taking your deposits. In many cases, you can avoid the monthly fee by maintaining a minimum balance in a checking or savings account. If not, shop around for the lowest monthly fee or one based on the number of checks written per month. The latter may make sense if you pay most bills online and write just a few checks each month. 4. Overdraft fees:
It’s easy to bounce a check if you don’t reconcile your account each month and keep an accurate record of all checks written. Check your ATM balance before making a withdrawal because most banks are only too happy to advance you the money and then charge a hefty fee if the withdrawal puts you in the red. Ask about linking your checking account to a bank-issued credit card to provide overdraft protection.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2009 Minyanville Media, Inc. All Rights Reserved.
Copyright 2009 Minyanville Media, Inc. All Rights Reserved.
(4)
Reply
2009-07-06 14:23:20
Ten Ways That Banks Rob You Blind
If you don't like it, don't use their services. Pay for your house in cash, pay for your car in cash, never use a credit or debit card, keep huge wads of money in your wallet, never leave home on vacation without all the money you'll need. This is just stupid. You think banks are quasi government and you're netitled to all kinds of free services. Sorry bub. It's a business... if you don't like it, take your business elsewhere - like your mattress.
2009-07-06 14:42:39
Avoiding overdraft fees
Most banks offer checking plus and it doesn't take a great credit rating to get a few thousand dollars of checking plus credit at interest rates way below credit card rates.
This helps three ways (at least at Citibank):
1. Your checks clear against uncollected funds and you pay no penalty and no interest.
2. Even if the excessive debit card holds from gas pumps, car rental companies, etc., deplete your available balance, then your ATM withdrawals, checks, and other debits go through with no penalty or interest charges.
3. If you need an end-of-month loan, checking plus costs MUCH less than a credit card cash advance and INCREDIBLY less than a payday loan.
Just remember to pay back Checking Plus balances as soon as you have the money.
This helps three ways (at least at Citibank):
1. Your checks clear against uncollected funds and you pay no penalty and no interest.
2. Even if the excessive debit card holds from gas pumps, car rental companies, etc., deplete your available balance, then your ATM withdrawals, checks, and other debits go through with no penalty or interest charges.
3. If you need an end-of-month loan, checking plus costs MUCH less than a credit card cash advance and INCREDIBLY less than a payday loan.
Just remember to pay back Checking Plus balances as soon as you have the money.
2009-07-07 09:10:19
Now's the time to be debt free
Simply put, get out of credit card debt. Once free from this burdon you will have more money in your pocket every month to spend on things you really need and not just want. It will take time to get that debt to zero but it's do-able. It took me a year to pay off my credit cards, I had to take on extra work and had a plan and followed through with it. Now I all my bills/food/gas/etc goes on an airline credit card and I actually get free flights (I figure a 4% payback) and mortgage and utilities are deducted from my bank account. I write about 6 checks a year for taxes and things that charge fees for taking credit cards.
My bank is now a holding spot for my cash for paying my living expences, I haven't paid a fee (other than $1.50 a month, no big deal) in the 30 years I've been with them.
I pay my credit card off every 2 weeks so there is no interest or charges accrued.
I realize this is much easier said than done but it can be done. Things aren't going to be getting any easier for the next 3 1/2 years and it might take another 10 or 12 years to get us out of the mess we are getting into now.
My bank is now a holding spot for my cash for paying my living expences, I haven't paid a fee (other than $1.50 a month, no big deal) in the 30 years I've been with them.
I pay my credit card off every 2 weeks so there is no interest or charges accrued.
I realize this is much easier said than done but it can be done. Things aren't going to be getting any easier for the next 3 1/2 years and it might take another 10 or 12 years to get us out of the mess we are getting into now.
2009-07-07 13:27:04
Simple Solution - Ditch MMB and use a Credit Union
Yes, Virginia, there is a difference. I have 2 CUs and 1 bank currently. I have belonged to about 5 CUs. Never have I had better service and no worries. I ditched BOA after they started adding BS fees. BOA cancelled my CC after I refused to let them arbitrarily jack up my rates.
Simple answer. Forget the Monster Mega Banks (thanks, Clark Howard!)
Simple answer. Forget the Monster Mega Banks (thanks, Clark Howard!)
Get real-time options trading ideas from Steve Smith, veteran options trader and newsletter author, plus let him show you the way to cut risk and boost your returns through the strategic use of options. Click here for a free 14 day trial to OptionSmith by Steve Smith.
Copyright 2009 Minyanville Media, Inc. All Rights Reserved
