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How to Get Around Monthly Service Charges

The monthly fee your bank charges you continues to climb. By some estimates, typical fees are in the neighborhood of $15.

There are plenty of reasons for the increase. According to a report from the Affinion Group, average customer profitability is down at most financial institutions following the financial crisis. Globally, average customer profitability declined 5-15%. Getting back to customer profitability is proving challenging. Nearly 60% of those surveyed reported decreased customer loyalty, 63% say customers are more price sensitive and are shopping around. Generally, customers have broader expectations and service demands have increased.

The American Bankers Association estimates the annual cost to a bank to maintain a checking account is between $250-$400 a year. You do the math, at $15 a month, they aren’t covering their costs.

So it’s not surprising that banks are on the hunt for more ways to improve their coffers. The good news is, you aren’t defenseless in your battle to just say no to monthly service fees. In fact, in an ABA survey last year, while 14% said they pay $10 or more, most were doing much better than that. Fifty five percent said they pay nothing and 10% said they pay $3 or less.

The American Bankers Association estimates the annual cost to a bank to maintain a checking account is between $250-$400 a year.

Here’s how to get around monthly service charges.

Set up direct deposit

Many financial institutions that offer free checking, particularly online-only banks, will waive checking fees if you set up direct deposit. "This may be possible for everyone, particularly those who may have little or no income coming in. Look for a no-strings attached option that does not require enrollment in certain products or programs," says Michele Townes, a spokesperson for Navy Federal Credit Union.

According to Andrea Luquetta, policy advocate at the California Reinvestment Coalition, Bank of America will waive the fee with only $250 direct deposit each month, Union Bank does so for one of its accounts with as little as $425 direct deposit, and Citibank will waive it if you have any amount of direct deposit and also use their bill pay feature at least once a month, she says.

Shop around

"For the best deals, go to a credit union, not a bank. Free checking is still available at small community banks and credit unions but harder to find at regional or big banks, unless you choose no-teller, all-electronic banking," says Edmund Mierzwinski, consumer program director for U.S. PIRG.

Know too, that some banks will reward you for choosing not to receive paper statements by doing away with your monthly service charge.

The bottom line, you have to read the fine print, the fee disclosures banks put on their websites. "Be clear about under what conditions, if any, the monthly fee will be waived. It could be a number of things, like total of monies on deposit in various accounts or that you have a mortgage at the same bank of at lest X amount," explains Edgar Dworsky of Consumer World.

"I just opened an ‘e-savings’ account at a local bank. The bank expects me to conduct all of my business electronically. If I do not opt to receive e-statements, the bank will charge $2.95 a month to mail a statement. If I dare walk into a branch to conduct some business with them, they will charge me a ‘branch transaction fee’ of $9.95!" says Dworsky.

Evaluate your bank choice annually to see if competitors are offering a better package of services at a lower cost.

Be mindful of your balance

It’s common that if you keep a certain minimum in your account that you your service charge can be waived. That figure can be as low as $10 or as high as $5,000, depending on the type of account and the institution, says Townes.

For example, Mierzwinski points to TD Bank’s regular checking account which has a $15 monthly service charge, which is on the high end, but its $100 minimum to easily avoid that fee is on the very, very low end, he says.

If you find it hard to maintain the required minimum, search for a bank with less stringent requirements, says David Bakke, a financial columnist with www.MoneyCrashers.com.

While monthly service fees can be instituted and raised at any time, if you do your homework, it can be a moot point.

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Anonymous   |     |   Comment #1
Never pay fees for any account. Also set up balance or debit alerts, and ACH alerts to be emailed or texted to you.
Anonymous   |     |   Comment #2
Do we really need lessons like this, are we that stupid and need to be told what and how to avoid the fees?
Anonymous   |     |   Comment #6
5 Bank Fees You Can Fight and Win

Anonymous   |     |   Comment #3
From my discussion with a retired bank officer who was formerly with a solid, well-capitalized larger bank, so-called brick-and-mortar bank offices are financial losers for banks and that probably accounts for the high costs the larger banks have incurred as overhead with regard to the profit margins for maintaining checking accounts. I see some branches for banks in this area that are around only two miles apart.  Why can't the large banks just get smart and trim down their number of their branches? There are lots of banking transactions done on atms, computers and even telephones and fewer checking transactions every year. Because credit unions are typically smaller than lots of banks, credit unions tend to have fewer offices which probably helps them get a competitive edge on banks. Yes, using a branch is nice for some things but everyone would be better off if more bank offices could simply be closed and used for other purposes.
Anonymous   |     |   Comment #5
I Live in Southern California and have noticed that Chase Bank and Citibank are expanding and building several new branches from scratch.  This is in addition to the Chase Bank network that was acquired through the WAMU failure.  I wonder if they will eventually be closing some close-by branches and perhaps CU's will be able to expand selectively and pick up these branch physical locations?

BTW, I don't bank at either Chase or Citibank due to low deposit rates and prefer CU or smaller community banks or S&L's.
Anonymous   |     |   Comment #7
Credit unions have purchased several empty bank buildings in my area. One large bank building the city actually bought and moved their offices into it. They needed the extra space and the 5  large vaults were a great asset for their records. 
Anonymous   |     |   Comment #4
"The bottom line, you have to read the fine print, the fee disclosures banks put on their websites."

Intervest National Bank checking account:

"Our ATM Card is available with this account at no additional cost and you can use it at ATMs nationwide that are linked to the NYCE and Cirrus networks. We do not charge a fee for our ATM card, however, we do charge a transaction fee for using it. In addition, the owner of the ATM where the card is used may charge a transaction fee for each use."
Bozo   |     |   Comment #8
I suspect it's not hard to avoid fees. At Alliant, there's no charge for my checking account. Maybe, one day, I might have to re-order checks, but I'm still working on the (free) first batch. As for ATMs. Wells Fargo's ATM is free, linked to a savings account with a minimum balance of $300. Our garden-variety checking account at Union Bank is also free, we just pay for some generic checks.

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