Millions of consumers across the country may have noticed that the price they pay to maintain basic banking accounts – ones which used to be low-cost or even free – is on the rise.
Fortunately, there are ways for consumers to avoid paying the fees many financial institutions are now charging in response to greater federal regulation of the banking industry and save money, according to a report from Good Morning America.
First, it’s important to know why these fees are being charged, the report said. It’s because the nation’s largest banks are now losing revenues because of restrictions put in place by both the Credit Card Accountability, Responsibility and Disclosure Act of 2009 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Experts have estimated that the banking industry will likely lose about $7 billion in revenues every year. As such, they are now instituting new policies that will help them to defray their losses a bit.
One of the things some banks are starting to do is institute more fees for maintaining accounts that used to be offered free of charge, particularly those for checking, the bank said. However, many also build in ways consumers can avoid them. For example, the bank may boost a checking account maintenance fee to $5 a month unless the user maintains a minimum balance of $1,000 or there are at least $1,500 worth of deposits made into it every month. Therefore, it can be extremely beneficial to consumers to review their account agreement to determine what they’ll need to do to avoid paying these fees.
In addition, banks are now prohibited from charging consumers overdraft fees when a consumers spends more on a debit card than they have left in their account unless they “opt in” to using the service, the report said. As such, many banks are trying to convince customers that this kind of “protection” is useful. But getting hit with a $30 or $35 fee for purchasing a $4 cup of coffee may make consumers think again. Thus, it can be extremely helpful to not opt in no matter what the bank says.
It can also be beneficial for consumers to make a greater effort to avoid using out-of-network ATMs, the report said. This is because the fees for using one can grow quite large, particularly if they’re independent machines not associated with a major bank, like those consumers would see in convenience stores. In many cases, making a debit purchase at a major retailer will allow consumers to receive “cash back” with their purchase, no matter how big it is. Therefore, buying a pack of gum for 50 cents from such a location and getting up to $40 or $50 in cash back may be preferable to paying the fees of between $3 and $5 for using an out-of-network ATM.
Banks must also legally alert customers to any increases in the fees it charges, so it will be important for consumers to keep an eye out for letters from the institution to make sure they’re aware of what they may end up having to pay, the report said.
Luckily, consumer discontent with rising fees for bank accounts is already turning the tide. Bank of America’s plan to begin charging customers $5 for any month in which a debit card is used to make a purchase has already been reversed, and similar test programs from other such financial institutions have already been canceled.