You might see a new addition to your checking account in a few weeks. No, it’s not more money—expect to see new fees. Many banks are raising existing fees or adding new fees to accounts. This is partly because financial institutions are seeking new revenue. Extending credit to high-risk consumers (for example, those with bad credit or no credit) backfired. Over time, many of these consumers were unable to pay back their loans. Consequently, banks lost a lot of money. In addition, the CARD Act, which made changes to protect consumers, hampered card issuers’ opportunities to make money from their customers. For example, a credit card company is not allowed to offer a low introductory rate and then increase the rate a few months later. An introductory rate (also known as a “teaser” rate) must remain the same for one year (however, certain exceptions to this rule apply).
The introduction of new fees is a way for credit card companies and banks to make money that they lost as a result of credit card reform and widespread credit defaults. Bank of America says it will start charging fees ranging from $6 to $25 a month. And Chase plans to place new customers in its Total Checking account, which requires a monthly maintenance fee of $12. Even though big banks like Chase, Citibank, and Bank of America are introducing new fees, there are ways for you to still enjoy free checking.
- Look for exceptions. Some bank fees can be avoided if you follow their rules. For example, many will waive the fee if you meet a minimum deposit level. Visit your bank’s website for a list of their exceptions.
- Ask for a waiver. In addition to maintenance fees, some banks are charging fees for inactivity. If you’ve been a long-time customer, some banks will honor a request for the fee to be reversed.
- Join a credit union. In a recent study, personal finance Website Bankrate found that 39 of the 50 largest credit unions offer free checking.
Sheiresa Ngo is the multimedia content producer for consumer affairs at Black Enterprise.
Be sure to also read…