The Bite of Bank Fees

The Washington Post ^ | 28 June 2009 | Nancy Trejos and Jonathan Starkey

[BGHater]

Customers Pay More as Institutions Seek Ways to Cope With Revenue Squeeze

Your bank wants more of your money, and it's found a way to get it:by jacking up the fees on your account.

Customers are paying more to maintain a checking account and withdraw cash from an out-of-system ATM,and when they bounce a check.To make up for declining revenue, many banks are boosting fees and are requiring higher minimum balances for many accounts.

The institutions also have made it easier for customers to spend more than is in their accounts -- and then hit them with substantial fees, a practice so vexing to consumer advocates that the Federal Reserve is thinking of regulating it.

Bank revenue has plummeted on the back of foreclosures and rising credit card delinquencies.Now Congress has passed a law cracking down on arbitrary and excessive credit card fees.So the banks have been fighting back.

"There is an economic storm that has made revenue fall," said Michael Moebs, an economist and chief executive of Moebs Services, an economic research firm in Lake Bluff, Ill. "Fee income is basically where banks and credit unions can offset both loan- and investment-related losses."

Bank of America this year raised the maximum number of times customers can get hit with overdraft fees from five a day to 10. On top of that, it began charging a one-time fee of $35 if the account remains in the negative for more than five days. The bank also raised the monthly fee on My Access checking accounts to $8.95 from $5.95. Citigroup's Citibank last year increased its overdraft fee to $34 from $30 and its ATM fees for non-Citibank customers to $3 from $2. Wells Fargo also last year increased its maximum overdraft and insufficient funds fee to $35 from $34.

[pnh102]

If you want to get banks off welfare at the fastest possible rate, then the government should mandate that all these fees for such banks be 0.

They will fall all over themselves to get off the dole.

[rovenstinez]

Maybe more exchanges will be in cash, and the IRS will have more difficulty following the money trail?

[rabscuttle385]

*Ping!*

[angkor]

I’ve had an overdraft line of credit with Citibank for 10 years. A couple months ago I went over on some debit card transaction by a couple dollars (less than $10) for a day or two. No biggie, that’s what it’s there for.

At the end of the month I saw a $10 charge on my statement, apparently Citibank had recently decided to charge $10 **a pop** for making use of the overdraft account, whether it’s $00.01 (one cent) or $5,000.00.

“So it’s not really an overdraft account, is it?” I asked Citibank. They hemmed and hawed and claimed that it is.

I’d say it isn’t.

[jeffc]

The institutions also have made it easier for customers to spend more than is in their accounts -- and then hit them with substantial fees.

This affects the poorest the most, as they have the smallest balances and live paycheck to paycheck. Will our fearful leader (who's always reminding us that he's the President!) save the poorest of the poor?

This might start to hit the middle-class, too. Bank balances for alot of people aren't what they used to be . . . .

BofA can hit you with 10 insufficient fund charges a day? Someone who has that many charges is doing something wrong and should be investigated for fraud. Banks should be limited to one IFC per day, and required to notify people within a timely (prescribed) manner. (I once got an IFC notice in the mail a week after it happened, and I had already taken care of it. I'm sure the bank really wanted to let it ride out to see how many more service charges they could hit me for - I changed banks).

[KarlInOhio]

BofA can hit you with 10 insufficient fund charges a day? Someone who has that many charges is doing something wrong and should be investigated for fraud.

BofA is big on sorting your day's transactions so that if you overdraft you will get the maximum number possible. If you have $1000 in your account and checks for $200, $200, $200 and $900, they'll put through the $900 first so they can bounce the 3 $200 checks instead of putting through the $200 checks so only the $900 one bounces.

[guns_for_liberty]

My bank once bounced my phone company check twice on the same day, then claimed they could bounce it an unlimited number of times in one day, each time it was “presented” for payment. The phone company denied trying to run it through twice.

What’s being ignored here is that the banks cannot legally “penalize” people for writing an overdraft. They can only charge a reasonable fee for the work involved in processing it.

[My hearts in London - Everett]

Happened to me with BofA last month. Ticked me off. They processed an $80 transaction first and then bounced 4 $5-10 transactions. They told me they had no control over how transactions come in. I could have sworn that I heard a few years ago that they were going to make it so banks had to process transactions smallest to largest. I’ve also seen transactions change order when checking my account online. My account will be fine and no charges pending at 11 pm and then I check it a 6 am and I’m overdrawn!