We’ve had a new law, the Dodd Frank Financial Reform Bill. We knew that this was going to cut into some of the banks’ profits, and the banks were going to be finding ways to make up for that difference. I’m here to caution everybody to pay attention. The banks are relying more and more on fees that they’re tacking on. The big place that they get a lot of money is overdraft charges. On our checking accounts, that’s where they make the most. Right now the average charge for an overdraft fee is $30. What we know is we have about seven overdrafts per year on each account. That’s a lot of money: $210! You could have overdraft protection, but you’re going to pay for that if you do that. They can charge those overdraft fees three to four times a day on something coming through. That really adds up.
You can also have it set up so that it moves money from your savings account to your checking account, but there’s a charge for that. Wells Fargo charges $12.50 a day on those transfers.
The question is: What do you do? Watch your accounts very closely. Of course, now many of our statements are coming electronically, so we don’t even pay attention to those. Try to keep a small pad in your checking account. The average monthly fees is now $14, and those free checking accounts are disappearing. Even those ones that have a minimum balance charge. The average minimum balance that’s required is $8,400. Very few people do that.
New fees are coming along. If you call up and ask questions on the phone, you will pay a fee to jump to the head of the line if you’re impatient. There’s a few to get your credit score. There are additional ATM fees. There’s a monthly fee you can pay to avoid ATM fees. They’re charging now more for checks. So they’re getting very creative.
Shop around. What we know is that smaller banks usually have lower fees. The bigger banks are really playing this game. Pay attention to your statements. Shop around for some smaller providers, and you’ll do better.