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| A credit card, the biggest beneficiary of the Marquette Bank decision (Photo credit: Wikipedia) |
Yet like most relationships, however, the arrangement between banks and consumers has gone sour in recent years. The Internet has made shopping for a loan, credit card, even where you deposit your paycheck to all 50 states, easier — posing more of a competitive challenge to banks. “Now you get your services from three different banks,” said Hank Israel, a partner at the financial-services consulting firm Novantis. “Each has to find a way to make a profit.” The number of fees a given bank charges has gone down recently, from more than 40 to 26, according to Pew Charitable Trusts. However, you only need to read banks’ financial reports to see that fees are a big part of their business model going forward.
Read ahead to see the fees that are causing the most trouble for banks and their customers. Overdraft Penalties
When we overspend our account with a check or debit card purchase and the bank covers it, we have to make good, right? Overdraft penalties, which average from $30 to $34 nationwide, theoretically act as a deterrent. That pays the bank's costs for papering over our errors.
In fact, there is little correlation between a banks’ cost to administer bounced checks or overzealous swipes. Overdraft fees, like most bank fees, are set by what the competition is charging. Nor are overdraft penalties related to going interest rates: charging $34 for covering the average overdraft of $36 for a week (when banks usually hit overdrawn customers with a second, “extended overdrawn balance” fee) amounts to a 5,000 percent annual interest rate. Account Statement Fee
Some of the most disconcerting fees are for services that were once a given, like sending customers a monthly statement of their account. Many banks now charge $2 to $3 a month for paper statements, or more if you want copies of your checks. As with overdraft penalties, the banks claim they are merely encouraging good behavior—this time in the name of the planet. “It's reflective of our commitment to be green by encouraging customers to use electronic statements,” a U.S. Bank spokesperson recently told the Cleveland Plain Dealer.
The banks, howver, may be looking for another kind of green. Wells-Fargo’s “Value Checking” charges monthly fees for sending images of cancelled checks — whether the customer wrote any checks that month or not — blurring the correlation between trees and fees.
At any rate, banks could as easily reward customers who opt for electronic-only statements by crediting their accounts $2 a month, passing on the savings in paper and mailing costs. ... Continue to read.
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