Were you surprised to find that your bank was charging a fee for something you either thought was free, or used to be free? Guess what? Banks are now unbundling services and charging for them. You may not know about it until you're charged. The key is to call the bank immediately; you may be able to get the fee reversed.

Lack Of Transparency With Bank Charges

US PIRG, an advocate group for public interest, conducted research on new bank charges and found that only 57% of banks provided the correct information on checking accounts. A shocking 23% didn't give a fee schedule and the remaining 20% gave the WRONG information.

In addition to new fees, some banks have rolled back the rewards on debit card purchases as well as charging you if you want to speak to a teller.

Why Are Banks Increasing Fees On Checking Accounts?

There are a couple of reasons. The first is in the area of overdraft protection. Some banks charge as much as $35 each time you overdraft your account. This has been commonly called the "$38 cup of coffee." You use your debit card to buy the coffee obviously not knowing you account had no money in it.

Additionally, banks were ordering the way the drafts came through your account to maximize their income. Say you had $100 in your account, and on the same day made a $100 purchase and 3 $10 purchases. If they allowed the 3 $10 purchases first, then the $100 purchase, you would be charged only one overdraft fee. But what they do is draft the $100 first, then the other three. FOUR overdraft charges of $35, or $140!!!

In 2009 the banking industry make $37.1 billion in overdraft fees, so the Federal Reserve in August of 2010 prohibited banks from automatically enrolling customers in overdraft protection. With overdraft protection they allow you to overdraft your account, and by doing so charge you the $35 fee. Now you have to opt-in to the service.

The other reason has to do with the fee the merchant pays the bank when you swipe your debit card, also known as the interchange fee. Currently, the retailer pays 44 cents to the bank for each swipe. The National Retail Federation wants to lower it to 12 cents. Another drastic blow to a bank's revenue.

Good News: Free Checking Is Still Available

  1. You can still receive free checking at smaller banks and credit unions. 
  2. If you don't want the hassle of moving your account (and who would?) because you have a ton of automatic payments tied to it, then perhaps if you leave a minimum amount in your account, it will be free. You aren't going to make much putting it in a CD, anyway. 
  3. Also, if you directly deposit a check into your account on a monthly basis, some banks are willing to waive the fee.

Another thing banks are doing to increase income is to charge $5 for an ATM withdrawal. A way to skirt around this is that some retailers will give you cash back when you write a check for a purchase (just be careful not to overdraft your account.) 

Has your bank started charging you unexpected fees for your checking account?

CategoriesCredit & Debt