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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsPeople with low checking account balances pay over $500 a year in fees
Published: Aug 18, 2016 11:06 a.m. ET
The average checking account has 22 fees, WalletHub found
By Sushma U N
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sushma.udipinagendran@dowjones.com
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Despite several government regulations to help protect consumers, checking account fees are soaring for people with low balances.
A cash-strapped consumer defined as one whose account frequently dips below $0, who opts-in to debit card overdraft often, and doesnt have direct deposit pays roughly $522 a year in fees to maintain his checking account, up from around $470 last year, according to a report by the personal finance website WalletHub. And consumers could pay as much as $810 a year in such fees. The different fees depend on the bank, the services the customer opts for, the minimum balance and other factors.
WalletHub also found that the average bank checking account has approximately 22 total fees, and 60% of accounts have 20 to 40 different categories of fees. With certain checking accounts charging close to 50 different fees, its nearly impossible to keep track of the growing structural complexity of this supposedly basic banking tool, the report said.
A lot of these penalties are for overdraft fees. Banks on average charge $35 each time a balance goes below $0 for a transaction. According to a report by The Pew Charitable Trusts, a nonprofit organization in Philadelphia, 10% of Americans paid at least one overdraft penalty fee in 2013. ... One way consumers can minimize the fees they pay is by moving their checking account to a credit union or online-only bank, WalletHub said in the report. .... By switching to a credit union or using prepaid cards to avoid overdraft fees, customers can save on their checking account fees, and cash-strapped consumers in particular could save up to $423 a year, the report said.
katmondoo
(6,454 posts)My bank that I used for over 20 years started that and I left them for the Credit Union. I am very happy with the way they handle my account.
WillowTree
(5,325 posts)charlyvi
(6,537 posts)but there is no minimum balance penalty fee, no monthly fees, no check fees, and I get a packet of six check books free per year. Wouldn't go back to a regular bank for the world!
yeoman6987
(14,449 posts)I have all those advantages but the free checks. I do also get ATM fees reimbursed to me once a month which is nice. That's new for about a year.
msongs
(67,394 posts)whatthehey
(3,660 posts)I can't speak to CU fees, but the other suggestions listed like prepaid cards make sense. Of course ideally people should know what they are spending and what they have left to spend.
Wednesdays
(17,342 posts)If those people would only stop their spendthrift ways, they'd never incur those fees.
And the banks are justified to charge the $35 per transaction that it costs them. How can bank execs maintain their meager existence otherwise?
yeoman6987
(14,449 posts)If I ever see a fee, I am in deep financial trouble. It's not hard to get a line of credit at all. I just applied and gave me 500 and raised it over time.
ck4829
(35,045 posts)wishstar
(5,268 posts)I had a CD for over $10,000 at a nearby bank and I decided to open a checking there too for convenience and was assured no fees since I had the large CD. I was hit with $15 per month fees (just standard maintenance to have the account, not any overdrafts) several months in a row, even after taking my statements in to explain I was exempt from fees because my balances were high. I closed that checking and as soon as CD matured I took it out and won't return to that bank.
My other bank's new ATM card wouldn't work at their ATM so I went in and they ordered me another one. My next bank statement had a $5 fee for the new ATM card. I had to go in to complain and get the fee removed. It wasn't my fault their ATM card wouldn't work.
A couple years ago at another bank I had a checking and overdraft savings already but they offered me a higher interest rate if I opened a new savings account (not a CD) so I did, but after a couple of months my interest never went up. I discussed it with them, they said it must have been a 'misunderstanding' so I had them close the new account as it was too much trouble to keep track of if interest wasn't higher. My next statement had a charge of $10 for closing the savings account but it was a no penalty savings and they had never mentioned a closing fee, so I complained and made them take that fee off.
I wonder how many people don't notice or don't bother to question all these fees.
kentuck
(111,078 posts)??
Codeine
(25,586 posts)will make overdraft fees go away. I'm perpetually broke but I've never overdrafted.