|
Keeping bank costs in check
|
 |
May 3, 1999: 10:22 a.m. ET
With the right bank and the right account, you may avoid excessive fees
|
NEW YORK (CNNfn) - When it comes to checking accounts, the price of convenience may never be too high.
At least that's the presumption many financial institutions seem to be banking on.
ATM surcharges and bounced check fees continue to rise each year, with an increasing number of banks imposing these types of penalties on consumers.
Although many of these charges may be unavoidable, there are ways to reduce your banking costs.
Exploring other options
For one, don't assume you have to bank at a bank.
Credit unions -- cooperative financial institutions owned and controlled by those who use them -- offer many of the same services as banks at a lower cost. And like bank deposits, accounts at credit unions are federally-insured.
A 1998 study found only 15 percent of credit unions charge monthly fees for checking accounts, compared with 86 percent of banks. In addition, checking fees charged by credit unions were about 30 to 40 percent lower than those of banks.
Credit unions can afford to be more generous because they are nonprofit and do not have to report to shareholders the way publicly-traded banks do.
Many companies, unions, state and local governments and communities have credit unions you and your family may qualify to join.
But credit unions are not for everyone.
They do not always have multiple branches or belong to ATM networks, and if they do, you may be subject to surcharges. To avoid fees, you may have to limit yourself to the credit union's one location, a situation not particularly ideal for those who make regular withdrawals or bank visits.
Bigger not always better
If credit unions are not an option, consider smaller, locally-owned community banks before heading off to a big financial institution.
Like credit unions, smaller banks tend to have lower prices and often provide better customer service than their larger, out-of-state owned counterparts.
Small banks are particularly appropriate for customers that require a lot of personal attention.
"You can complain to a small bank, but you can't always complain to a big bank," Ed Mierzwinski, the consumer program director at the Public Interest Research Group, said. "When you talk to people at a small bank, they actually have the authority to make decisions."
They also may be more willing to make exceptions or waive fees under certain circumstances.
Shopping around
Banks are constantly changing their fee structures, so no matter what type of bank you choose, arming yourself with information is key.
Because banks are required to give you a list of their charges, be sure to ask about monthly fees, fees for check processing, and ATM costs. In addition, find out how much the bank will charge if your account falls beneath a certain balance, if you bounce a check or if you deposit a check that bounces.
Do not assume checking-with-interest accounts are a better deal simply because they pay interest. Often these accounts have high minimum balances and the cost of maintaining the account may offset any interest earned.
If you only write a few checks each month, consider a no-frills flat fee checking account, especially if you cannot maintain the minimum required balance to avoid regular checking fees.
But be careful. Many no-frills accounts charge outrageous fees once the check limit has been exceeded.
Choosing the right account will depend largely on your needs and preferences.
"You need to analyze your own banking behavior," said Janet Eissenstat, spokeswoman for the American Bankers Association. "That means sitting down with your checkbook and figuring out how many times you write a check, go the ATM… Are you somebody that keeps no minimum in your account?"
Other factors to consider may include location and the availability of premium services, such as overdraft protection or online banking.
Lowering costs
No matter what type of bank account you choose, you can take steps to reduce associated costs.
The biggest mistake most consumers make when it comes to banking, says Consumer Federation of America executive director Stephen Brobeck, is not maintaining the minimum balance on their accounts.
"If consumers would simply maintain the minimum balance requirement, they wouldn't get hit with monthly fees and wouldn't bounce checks," Brobeck said. "You want to find a bank that has a minimum balance requirement you can meet."
That may be easier said than done for some consumers, though there may be ways to avoid monthly fees altogether.
Many banks offer free or lower-cost checking with direct deposit, so find out if your employer can pay you that way. If you are a government employee, you may also be able to get Social Security and other benefits directly deposited.
Look for banks that offer free checking or free checking with a "linked" account. Sometimes your savings balance or a mortgage or car loan can offset minimum account balance requirements.
For additional savings, get your checks printed by an outside company. Newspaper circulars often advertise check printing services at a fraction of the cost banks charge.
Battling ATM fees
When it comes to exorbitant bank fees, automatic teller machines are the worst offenders.
A recent Public Interest Research Group study found that the number of banks imposing ATM fees climbed a dramatic 31 percent last year, with 93 percent of all banks now surcharging non-accountholders.
Luckily, most banks don't charge you for using their own machines, so try and use your own bank's ATM whenever possible. If none are around, it may be worth to walking the extra block for a machine that doesn't charge the extra fee.
If you use a debit card to shop, get cash back whenever you need it. There's no extra charge for withdrawing that money and it may save you a surcharge down the road. Also take out larger amounts each time you hit the ATM. Often people don't plan ahead how much cash they will need and end up paying multiple fees unnecessarily.
Ask and you may receive…
Never underestimate the power of complaining.
If you are a regular customer and rarely bounce checks, your bank may be willing to waive the fee on the occasion you do overdraw on your account. The same holds true if your bank wants to charge you for someone else's bounced check deposited in your account.
Whether or not the bank waives the occasional fee may depend on how valuable a customer you are, says CFA's Brobeck.
"Banks are increasingly monitoring profitability," Brobeck said. "If you have borrowed a lot of money or have tens of thousands of dollars in a money market account, they won't want to lose you."
For everyone else, it never hurts to ask. 
-- by staff writer Nicole Jacoby
|
|
|
|
|
 |
|
