Bank mailed me letter, $5 fee starts in June

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Bank mailed me letter, $5 fee starts in June

Postby crowd79 » Tue Apr 30, 2013 6:58 am

So I got a letter from my local bank (River Valley) yesterday stating that beginning June 1st, a monthly service fee of $5 will be billed unless I keep an "average ledger balance" of $300 or more per month for all Checking accounts. What the heck do they mean by "ledger balance" anyways. The account pays only .01% interest anyways. I will not pay them for the priviledge to hold my money ($300) hostage for their own pleasurable use to avoid this stupid, criminalizing fee. I will take my business elsewhere.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby livesoft » Tue Apr 30, 2013 7:02 am

I have to smile. What "business" are you taking elsewhere? If you have less than $300 in your account with them, you really are just a nuisance, not a criminal. Sorry, but look at it from their point of view.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby crowd79 » Tue Apr 30, 2013 7:09 am

livesoft wrote:I have to smile. What "business" are you taking elsewhere? If you have less than $300 in your account with them, you really are just a nuisance, not a criminal. Sorry, but look at it from their point of view.


So you think it's ok for banks to charge people to borrow their money? This is just another way for banks to increase their profits at the expense of the little guy.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby nisiprius » Tue Apr 30, 2013 7:11 am

crowd79, look it it coldly and do what is best for you and will cause you, overall, the least discomfort, both financially and psychologically.

Ask them what "ledger balance" means. I think it means your paycheck counts immediately when it is deposited, not when the funds become available a few days later. Basically I think it means what counts is the number that shows up online or on your printed ATM slip--the number that is not the "available funds" number.

I hate banks and I hate fees and I hate the proliferation of fees. But be careful. $300 doesn't sound to me like a lot, and you need to shop around carefully to make certain there is really some other bank or credit union that really will treat you better.

One of the things I really hate is that it's awfully hard to "vote with your dollars" because as soon as banks see one bank getting away with something, the speed with which others adopt it is breathtaking. Like airline checked-baggage fees.

$5 a month really does matter. However, keeping a $300 cushion in the account, these days, means foregone interest of maybe... well, in our checking account, $300 * 0.05%/year = 15 cents. You might ask the bank whether they will count a savings account toward the $300 minimum, and, if so, open a savings account and stick $300 in just to make sure you avoid fees.

Don't cut off your nose to spite your face. It may be that keeping $300 in the account is your least bad alternative. Tough if you don't have $300 to spare. Once upon a time my wife and I deliberately fudged our checkbook register so that the balance in the register was lower than the real balance, but that kind of mind game doesn't work in this electronic era.

Livesoft, the reason why banks should treat small savers decently is that if they are thinking long-term, it's good business. Banks blather about building relationships. Well, either they want to build relationships or they don't. People have memories. People talk to friends. Treating small savers as legitimate customers is a perfectly appropriate thing to do if you are thinking long-term, because small savers become big savers. We have been with our local bank now for more than thirty years, and the reason is that although they don't have they highest rates or the best deals around, they have decent rates and good deals and they have never done anything to tick us off. Banks that play hardball and treat customers strictly on a short-term profit basis should not be surprised when those same customers play hardball with them.

I still haven't forgiven the bank that put up a cord and walled off one teller's station for use by people who had >$10,000 in the bank. And I had over $10,000 in that bank. And you know what? They were gobbled up by Bank of America and I still hate them for it AND I hate Bank of America because my anger is associated with that branch physical location. Every time I walk past that branch location I think "that's where they had the special cashier line." And Bank of America gets the guilt by association! Pretty crazy, huh?
Last edited by nisiprius on Tue Apr 30, 2013 7:34 am, edited 1 time in total.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby deanbrew » Tue Apr 30, 2013 7:25 am

A $300 balance is peanuts. I can see the bank's position in this, as a bunch of small accounts with less than $300 in them are a nuisance. I'm curious what kind of account this is and what the OP uses it for. I would inquire whether the account can be tied to other accounts at the same bank to avoid fees. For example, my kids both have checking accounts. Normally, they would have to keep a minimum balance, but because the accounts are "tied" to my checking account, low-balance fees on their accounts are waived.

On a business account, I was hit with a fee last month due to dropping below $7,000 one time during the month. I didn't even know about the $7k minimum, which they apparently put in place to replace the $3k previous minimum (which I thought was still in effect). I went over and talked to the manager, and she reversed the fee and explained that the bank has changed its accounts, and I could avoid all low-balance fees if I opened a business savings account. I asked how much I would be required to have in the savings account, and she said at least $300. :D So, I can sidestep the $7k minimum balance in my business checking by keeping $300 in an affiliated business savings account. It doesn't earn much interest, but I can live with that tradeoff. The manager has waived many fees and also offered many suggestions over the years as the bank keeps changing policies.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby nisiprius » Tue Apr 30, 2013 7:30 am

Crowd, deanbrew raises another good point. My personal experience is that if you get hit by some fee because of some change in policy--or carelessness--or whatever, most financial institutions will waive a fee ONCE, if you just ask them to do it, in a polite way. It doesn't sound as if you've been hit by this fee yet. If you go forward, and one day there is $295 in the account at the end of the day and they ding you with the fee, do call them and ask for it to be waived. It almost doesn't matter what you say as long as you are polite and make it a request rather than a demand.
Last edited by nisiprius on Tue Apr 30, 2013 7:34 am, edited 1 time in total.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby VictoriaF » Tue Apr 30, 2013 7:32 am

Why to use banks? Credit unions are much better.

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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby Grt2bOutdoors » Tue Apr 30, 2013 7:37 am

crowd79 wrote:So I got a letter from my local bank (River Valley) yesterday stating that beginning June 1st, a monthly service fee of $5 will be billed unless I keep an "average ledger balance" of $300 or more per month for all Checking accounts. What the heck do they mean by "ledger balance" anyways. The account pays only .01% interest anyways. I will not pay them for the priviledge to hold my money ($300) hostage for their own pleasurable use to avoid this stupid, criminalizing fee. I will take my business elsewhere.


Do you have an ATM card? Do you have the ability to walk into your local branch and make inquiries with a live person? Do you have a means of making a deposit and then write checks/ACH debit to your receipients? Do you have FDIC insurance? Do you receive a mailed statement to your home?

If you answer "Yes" to at least 2 of those questions above, well, my response to you is "nothing is free in life" - FDIC insurance costs the bank money, it's not freely provided by the government to you, they pay a monthly premium based on deposits in the bank. The teller behind the desk or window - doesn't show up to work for free - they get paid in cold hard greenbacks. That ATM card - costs about $5 to make, not including postage costs, computer network costs and ATM network fees which get paid to someone other than your local bank. The bank is also required by it's regulator to hold about 10% of your demand deposit balance in the form of capital - that costs them money too, because they can't lend it out. A ledger balance refers to the amount you hold on deposit on an average monthly basis. If there are 30 days in the month, then on an average day you must hold at least $300 in the account to avoid being charged a fee. BTW, the bank isn't making any real money off of your $300 (as precious as it may be to you). Just think of the $300 as a cost of doing daily life.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby 1210sda » Tue Apr 30, 2013 7:38 am

Lets see, if you keep $299.00 in your account, it'll cost you $5.00 per month. That's $60.00 per year.

At $300.00 you save the $60.00. That's almost like getting a 5% return on your bank account.

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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby Cut-Throat » Tue Apr 30, 2013 7:42 am

My bank does the same thing, but if you have a deposit every month into the account, they waive the fee.

I just set up a recurring transfer and no fee occurs.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby bUU » Tue Apr 30, 2013 7:42 am

I do think a lot of American consumers grossly over-value their own patronage, and not just as bank depositors.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby nisiprius » Tue Apr 30, 2013 7:49 am

bUU wrote:I do think a lot of American consumers grossly over-value their own patronage, and not just as bank depositors.
I think a lot of American businesses grossly undervalue the benefit of long-term customer relationships.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby NateH » Tue Apr 30, 2013 7:50 am

My bank charges $15 per month if i don't keep a 5000 minimum balance, between the linked checking and savings accounts. Stagecoaches are expensive to maintain, i guess. I've never paid it, and i still get free web banking, internet bill pay, ATM, FDIC insurance, etc, etc, etc.

I'm actually suprised your bank has held out this long until finally implementing a low-balance fee. Vanguard has been doing it forever.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby NateH » Tue Apr 30, 2013 7:52 am

nisiprius wrote:
bUU wrote:I do think a lot of American consumers grossly over-value their own patronage, and not just as bank depositors.
I think a lot of American businesses grossly undervalue the benefit of long-term customer relationships.


i think you're both right.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby VictoriaF » Tue Apr 30, 2013 8:03 am

NateH wrote:
nisiprius wrote:
bUU wrote:I do think a lot of American consumers grossly over-value their own patronage, and not just as bank depositors.
I think a lot of American businesses grossly undervalue the benefit of long-term customer relationships.


i think you're both right.

You are right.

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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby bUU » Tue Apr 30, 2013 8:09 am

nisiprius wrote:
bUU wrote:I do think a lot of American consumers grossly over-value their own patronage, and not just as bank depositors.

I think a lot of American businesses grossly undervalue the benefit of long-term customer relationships.

I used to believe that. I actually was a member of technical staff for a leading research and development organization back in the 1980s. Our lab was focused on quality management and customer loyalty. By the end of the 1980s, more in-depth investigations started revealing that quality wasn't free, and that it needed to be managed like any other costly asset. And customer loyalty was found to be among the most over-valued assets in the quality management portfolio. And it has only gotten worse since then, as the American consumer has maniacally pursued a policy of selecting the low-cost provider with no appreciable consideration of quality.

American businesses learned from their mistakes, and now realizes just how little customer "loyalty" is worth.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby ieee488 » Tue Apr 30, 2013 8:17 am

crowd79 wrote:So I got a letter from my local bank (River Valley) yesterday stating that beginning June 1st, a monthly service fee of $5 will be billed unless I keep an "average ledger balance" of $300 or more per month for all Checking accounts. What the heck do they mean by "ledger balance" anyways. The account pays only .01% interest anyways. I will not pay them for the priviledge to hold my money ($300) hostage for their own pleasurable use to avoid this stupid, criminalizing fee. I will take my business elsewhere.


I have a checking account with a local bank. It doesn't pay any interest, and there is no minimum balance.
I usually keep more than $300 in it. The funny thing is that if there was a fee if the minimum fell below $300, I would actually stress out about it.

Your bank has a special program for those 50+. Are you eligible?

Though it is a hassle, it sounds like time to switch banks.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby swong » Tue Apr 30, 2013 8:22 am

I kind of find this particular posting humorous but there is seriousness in the person posting his/her concerns. Keep in mind the convenience of having a checking account has many advantages over a modest monthly fee some of which include the ability to have automatic monthly bill payments saving you both time and money not having to walk to the mailbox or post office to pay your monthly gas/electric/phone payments. You save the price of postage stamps for each of these bills which for me add up quite surprisingly especially as a homeowner. There is no FREE lunch as many forum members continually state and monthly checking account fees is included. Having a checking account saves me money not having to remember when any recurring payments are due along with their nasty penalties when paid late late. Visa, Mastercard, and AMEX are notorious for hammering you if you are even a day late in payment! I do NOT see how anyone can live without a checking account and I depend on mine. My monthly social security, monthly pension annuity, annual tax refunds, etc are automatically credited to my checking account saving me trips to the bank to deposit paper checks. USPS mail for your information is slowly dying, unreliable and 6-day mail delivery is is serious jeopardy of being cut back. BTW, I do not pay any monthly fees for my checking at all because Chase Bank waives monthly checking account fees when your monthly SS deposit is directly deposited to your checking account. What's not to like even if you had to pay the $5/month ???
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby jimmyrules712 » Tue Apr 30, 2013 8:36 am

Many people will tell you to use a local credit union, however my only local credit union now requires a minimum balance to avoid fees.

If you don't have any fee-less banks around then there are some good options with online banks, if you're willing to try that.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby rustymutt » Tue Apr 30, 2013 8:37 am

Change banks and show them you can think for yourself.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby beardsworth » Tue Apr 30, 2013 8:41 am

nisiprius wrote:Livesoft, the reason why banks should treat small savers decently is that if they are thinking long-term, it's good business. Banks blather about building relationships. Well, either they want to build relationships or they don't. People have memories. People talk to friends. Treating small savers as legitimate customers is a perfectly appropriate thing to do if you are thinking long-term, because small savers become big savers. We have been with our local bank now for more than thirty years, and the reason is that although they don't have they highest rates or the best deals around, they have decent rates and good deals and they have never done anything to tick us off. Banks that play hardball and treat customers strictly on a short-term profit basis should not be surprised when those same customers play hardball with them.


Well said. nisiprius is right.

VictoriaF wrote:
NateH wrote:
nisiprius wrote:
bUU wrote:I do think a lot of American consumers grossly over-value their own patronage, and not just as bank depositors.
I think a lot of American businesses grossly undervalue the benefit of long-term customer relationships.


i think you're both right.

You are right.

Victoria


But Victoria is also right about NateH being right about nisiprius and bUU both being right. :)
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby cheese_breath » Tue Apr 30, 2013 8:53 am

livesoft wrote:I have to smile. What "business" are you taking elsewhere? If you have less than $300 in your account with them, you really are just a nuisance, not a criminal. Sorry, but look at it from their point of view.

I had a similar experience. I kept a small amount in a bank savings account because the bank had branches close to both my work and home which made it a convenient place to cash checks. But I kept everything else in my credit union because it paid higher interest. When the bank instituted a minimum account balance policy and began charging a service fee on my account I reacted like OP and cancelled the account immediately. Many, many years have passed since then and I now understand that my small account probably was a nuisance to the bank, and I only hurt myself because I had to drive farther to cash my checks. The cost of my lost time and car expenses most likely outweighed the bank’s service charge.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby VictoriaF » Tue Apr 30, 2013 8:53 am

MarcMyWord wrote:
nisiprius wrote:Livesoft, the reason why banks should treat small savers decently is that if they are thinking long-term, it's good business. Banks blather about building relationships. Well, either they want to build relationships or they don't. People have memories. People talk to friends. Treating small savers as legitimate customers is a perfectly appropriate thing to do if you are thinking long-term, because small savers become big savers. We have been with our local bank now for more than thirty years, and the reason is that although they don't have they highest rates or the best deals around, they have decent rates and good deals and they have never done anything to tick us off. Banks that play hardball and treat customers strictly on a short-term profit basis should not be surprised when those same customers play hardball with them.


Well said. nisiprius is right.


He is, but there is a behavior-economic nuance to it. Dan Ariely provides some good banking examples when he discusses the difference between social norms and market norms. If a bank starts out with and maintains market norms, i.e., "plays hardball and treats customers strictly on a short-term profit basis," the customers accept the norms and stay with the bank or leave it based on their rationally perceived value and some cognitive factors. Examples of the latter may include the effort required to change a bank, unawareness of the differences between banks, etc.

A bank may also focus on the social norms, which Nisiprius's bank seems to do. And this is fine, too, for as long as a social-norms bank maintains the social-norms policies. However, if a social-norms bank starts resorting to market-norms tactics, its customers become very angry and leave in droves. They leave to inferior banks, they leave despite the effort required to severe the ties, they do it because they feel hurt. The OP's bank may have just switched from social norms to market norms.

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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby livesoft » Tue Apr 30, 2013 8:56 am

Unfortunately, many low-income folks cannot afford to have a checking account. They tend to do everything with cash.

There are also those that have bounced checks and no bank will have them as a customer.

Everybody else should be able to find free checking even if they have to keep some money in another account at the bank or mail in deposits. For example, I have to keep some shares of Vanguard ETFs at my bank in order to get free checking and other free things.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby AnimalCrackers » Tue Apr 30, 2013 9:00 am

VictoriaF wrote:Why to use banks? Credit unions are much better.

Victoria

+1

Compass bank did something similar to me, so I closed all accounts and started using my credit union as much as possible. I haven't had a "banking" headache since. I sometimes wonder, "Who switches back?"
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby Jfet » Tue Apr 30, 2013 9:06 am

Say the bank loans out 90% of your $300 at an outrageous 30 year mortgage rate of 5%.

That means each year they make $14.50 off of your money.

In order to get access to your $300, they have to mail you statements each month, provide atms and tellers, send you a new bank card, insure your money, and protect you from fraud

If that is criminal, they are really low aspiring criminals.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby KyleAAA » Tue Apr 30, 2013 9:07 am

crowd79 wrote:
livesoft wrote:I have to smile. What "business" are you taking elsewhere? If you have less than $300 in your account with them, you really are just a nuisance, not a criminal. Sorry, but look at it from their point of view.


So you think it's ok for banks to charge people to borrow their money? This is just another way for banks to increase their profits at the expense of the little guy.


Yes, it's certainly okay. Why wouldn't it be? You are costing them more money than they are making off you buy lending out your deposits. That's why they're initiating the $5 fee.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby Random Poster » Tue Apr 30, 2013 9:30 am

1210sda wrote:Lets see, if you keep $299.00 in your account, it'll cost you $5.00 per month. That's $60.00 per year.

At $300.00 you save the $60.00. That's almost like getting a 5% return on your bank account.

1210


That is an odd way of looking at it, since you don't earn $60 by keeping $300 in the account. At best, you get a 5% phantom return---that you don't see, you don't get to spend, and you don't get taxed on.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby telemark » Tue Apr 30, 2013 9:52 am

MarcMyWord wrote:
nisiprius wrote:Livesoft, the reason why banks should treat small savers decently is that if they are thinking long-term, it's good business. Banks blather about building relationships. Well, either they want to build relationships or they don't. People have memories. People talk to friends. Treating small savers as legitimate customers is a perfectly appropriate thing to do if you are thinking long-term, because small savers become big savers. We have been with our local bank now for more than thirty years, and the reason is that although they don't have they highest rates or the best deals around, they have decent rates and good deals and they have never done anything to tick us off. Banks that play hardball and treat customers strictly on a short-term profit basis should not be surprised when those same customers play hardball with them.


Well said. nisiprius is right.

VictoriaF wrote:
NateH wrote:
nisiprius wrote:
bUU wrote:I do think a lot of American consumers grossly over-value their own patronage, and not just as bank depositors.
I think a lot of American businesses grossly undervalue the benefit of long-term customer relationships.


i think you're both right.

You are right.

Victoria


But Victoria is also right about NateH being right about nisiprius and bUU both being right. :)


And I am right, and you are right, and all is right as right can be!
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby Boglemama » Tue Apr 30, 2013 9:55 am

AnimalCrackers wrote:
VictoriaF wrote:Why to use banks? Credit unions are much better.

Victoria

+1

Compass bank did something similar to me, so I closed all accounts and started using my credit union as much as possible. I haven't had a "banking" headache since. I sometimes wonder, "Who switches back?"


Yup! We had 2 banks. A local bank and a credit union. Our house accounts were at the local bank and personal accounts at the credit union. Then the local bank started a minimum balance policy and the charge was $6.95 per month. We switched house accounts over to the credit union and now no fees and no minimum balances!

I wouldn't get angry at the bank and I didn't. They can charge whatever they want to charge and you can decide to pay or not. If you decide not to pay then just switch somewhere else whose terms you like better. :beer
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby Default User BR » Tue Apr 30, 2013 10:02 am

crowd79 wrote:So I got a letter from my local bank (River Valley) yesterday stating that beginning June 1st, a monthly service fee of $5 will be billed unless I keep an "average ledger balance" of $300 or more per month for all Checking accounts. What the heck do they mean by "ledger balance" anyways. The account pays only .01% interest anyways. I will not pay them for the priviledge to hold my money ($300) hostage for their own pleasurable use to avoid this stupid, criminalizing fee. I will take my business elsewhere.

That's actually pretty good these days. US Bank added a $20 fee that required a higher balance than that to avoid, on a checking account paying 0. But yes, move your business if you can find a better deal.


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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby crowd79 » Tue Apr 30, 2013 10:05 am

Problem is, I have to weigh whether having the convenience of River Valley Bank branches exactly between my work and home and my home and the YMCA (where I work out at) outweighs me giving them $300 for them to use for free to keep my checking account balance permanently above that level when I could invest it elsewhere....
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby tfb » Tue Apr 30, 2013 10:08 am

crowd79 wrote:Problem is, I have to weigh whether having the convenience of River Valley Bank branches exactly between my work and home and my home and the YMCA (where I work out at) outweighs me giving them $300 for them to use for free to keep my checking account balance permanently above that level when I could invest it elsewhere....

Why is that problem? Isn't that we do every day, weighing price versus value? Do I pay $2.49 for this carton of milk that gives me protein and calcium? Do I pay $10 to have my hair cut by this person?
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby Index Fan » Tue Apr 30, 2013 10:14 am

VictoriaF wrote:Why to use banks? Credit unions are much better.


I looked into joining a credit union I was eligible to join, and they had a $5 monthly account fee. I stuck with my regional bank that has a modest balance requirement to avoid monthly fees.

Look at banks and credit unions individually to see where the good deals are, though fee situations seem to change quickly these days.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby Sidney » Tue Apr 30, 2013 10:16 am

crowd79 wrote:Problem is, I have to weigh whether having the convenience of River Valley Bank branches exactly between my work and home and my home and the YMCA (where I work out at) outweighs me giving them $300 for them to use for free to keep my checking account balance permanently above that level when I could invest it elsewhere....


Do you really need a brick and mortar bank? I have been with USAA for a couple of years now and have never needed a branch. I can use any ATM in town and they reimburse the ATM fee.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby nisiprius » Tue Apr 30, 2013 10:17 am

Last edited by nisiprius on Tue Apr 30, 2013 10:20 am, edited 2 times in total.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby VictoriaF » Tue Apr 30, 2013 10:19 am

Are bank customers going postal?

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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby bottlecap » Tue Apr 30, 2013 10:22 am

crowd79 wrote:Problem is, I have to weigh whether having the convenience of River Valley Bank branches exactly between my work and home and my home and the YMCA (where I work out at) outweighs me giving them $300 for them to use for free to keep my checking account balance permanently above that level when I could invest it elsewhere....


And this is the point. You don't bank there because you want to lend the bank money, but for the convenience. But you want the convenience to be free. Life is about decisions based on value and this presents you with several choices. Personally, I'd keep more than $300 in the account. I don't like fees I can easily avoid.

If the bank didn't make money somehow, you wouldn't have the convenience of banking there anyhow.

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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby fareastwarriors » Tue Apr 30, 2013 10:23 am

300 seems like a pretty low bar...
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby Silence Dogood » Tue Apr 30, 2013 10:35 am

Tempest in a teapot.

The best solution is to keep a minimum of $300 in the account.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby DoubleDraw » Tue Apr 30, 2013 10:36 am

crowd79 wrote:So I got a letter from my local bank (River Valley) yesterday stating that beginning June 1st, a monthly service fee of $5 will be billed unless I keep an "average ledger balance" of $300 or more per month for all Checking accounts. What the heck do they mean by "ledger balance" anyways. The account pays only .01% interest anyways. I will not pay them for the priviledge to hold my money ($300) hostage for their own pleasurable use to avoid this stupid, criminalizing fee. I will take my business elsewhere.


It sounds like they will no longer pay you for the privilege of holding your $300. They are asking you to become a profitable customer or leave. Seems fair to me.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby Dulocracy » Tue Apr 30, 2013 10:41 am

Random Poster wrote:
1210sda wrote:Lets see, if you keep $299.00 in your account, it'll cost you $5.00 per month. That's $60.00 per year.

At $300.00 you save the $60.00. That's almost like getting a 5% return on your bank account.

1210


That is an odd way of looking at it, since you don't earn $60 by keeping $300 in the account. At best, you get a 5% phantom return---that you don't see, you don't get to spend, and you don't get taxed on.


Not odd at all. The point is that the bank has costs. Those costs are not paid for by the meager amounts some people keep in an account. If you keep $50 in the account, the bank is losing money. If you use the account for money funneling (Deposit checks, take money out), they have transaction costs. Your monthly statement has to be printed and mailed out. The bank pays for insurance and maintains branches. Who pays for that? How many accounts should the bank lose money on in order to get loyalty of people who obviously are never going to be profitable for the bank?

Let us put this another way: As a stockholder (presuming you hold an index fund), do you want your stocks doing well or not? You want positive returns? So you want banks to be profitable? So, maybe this minimum balance is not so bad after all.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby bUU » Tue Apr 30, 2013 10:48 am

Dulocracy wrote:The point is that the bank has costs.

And obligations to turn value into profit.

Dulocracy wrote:How many accounts should the bank lose money on in order to get loyalty of people who obviously are never going to be profitable for the bank?

It's a good question. I very deliberately viewed the landscape, and made changes at the end of 2012 capitalizing on a local bank's willingness to hold practically no money of ours (obviously, we have to keep at least $1 on account), give us ATM access (i.e., which means we can make deposits of physical checks), ETF to our "real" accounts, and serves as a place where we can get cashier's checks when necessary. There's no way that they can be making enough off of the $40 we have on account with them on average to justify keeping us. And if they say they're going to start charging us, I'll find some other solution, and won't hold a grudge against them whatsoever. Their figurative kicking us out of their bank would be nothing less than fair.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby Mudpuppy » Tue Apr 30, 2013 11:07 am

VictoriaF wrote:Why to use banks? Credit unions are much better.

This is not a universal truth. The largest local credit union is as bank-like as a credit union can legally be. To use an example with relevance to this thread, you can't just get a free, basic checking account anymore. There is an ever rotating availability of the latest gimmick checking accounts (some with fees, some without fees), but there is no basic checking option except for teenagers. They also charge $10 just to join and are constantly sending out offers that rope you into additional monthly fees if you accept the offer (and of course those additional monthly fees are buried in the fine print). They also slammed me with over $125 of fees when I transferred a rollover IRA away from them and over to Vanguard, again the fees were buried in the fine print.

Most of these changes came after they were in jeopardy of being taken over by NCUA and brought in a new CEO. I don't know how much was the new CEO (formerly a mortgage company president/CEO) and how much was in response to the NCUA issue, but it is now really more of a bank than a credit union. I only keep my account there because they have not yet forced the old checking accounts to move to the new gimmicky checking accounts.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby Sheepdog » Tue Apr 30, 2013 11:11 am

If I have a $5000 minimum amount deposit at my bank in savings, checking, and/or CDs, I get free checks and checking as well as the privileges of belonging to their seniors Gold Club with perks. I have not been unhappy with that minimum.
I remember there was a time (the 60s) when banks (in NJ) charged 10 cents for each check written with a minimum of $150 in the checking account. If the account went below $150, the checks were 20 cents each and that was when you wrote checks for everything, or you went from utility to utility to store and wherever to pay it in cash
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby Jfet » Tue Apr 30, 2013 11:23 am

I have to keep like $25,000 minimum at my bank to get all of the perks, so you are getting off pretty easy at $300 :D
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby crowd79 » Tue Apr 30, 2013 11:24 am

Banks profit on the difference of the interest they pay me and turning around and lending that money to someone else. I don't care if it's $1 million or $50. To say that the bank makes nothing off of consumers with small balances is wrong.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby Jeff7 » Tue Apr 30, 2013 11:28 am

crowd79 wrote:Banks profit on the difference of the interest they pay me and turning around and lending that money to someone else. I don't care if it's $1 million or $50. To say that the bank makes nothing off of consumers with small balances is wrong.
My guess is that, with interest rates as low as they are, the amount they would make by lending $300, or a similarly-small amount, is so low that it wouldn't cover their fixed costs for maintaining that account.

Now, with that said, I don't know what that fixed cost is, or if it justifies a $5 fee, or if a $0.50 fee would be more in line with the actual annual cost.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby FabLab » Tue Apr 30, 2013 11:36 am

Seems like a lot of hand wringing for naught.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby winglessangel31 » Tue Apr 30, 2013 11:38 am

bUU wrote:I do think a lot of American consumers grossly over-value their own patronage, and not just as bank depositors.

Bingo. All that "the customer is always right" attitude. :sharebeer
$300 is a very low bar; if the OP really wants the keep the account and its perks, the OP should just stick $300 in there. Lots of other banks have a much higher bar, not that that makes it more justifiable (it is the same justifiable), but that it makes it more palatable. Count the $300 as part of one's emergency funds, if it makes it better. If you really do need to touch it, withdraw all and close the account. Done.
crowd79 wrote:So I got a letter from my local bank (River Valley) yesterday stating that beginning June 1st, a monthly service fee of $5 will be billed unless I keep an "average ledger balance" of $300 or more per month for all Checking accounts. What the heck do they mean by "ledger balance" anyways. The account pays only .01% interest anyways. I will not pay them for the priviledge to hold my money ($300) hostage for their own pleasurable use to avoid this stupid, criminalizing fee. I will take my business elsewhere.

Given the backlash you have gotten for this post, I wonder if you still consider yourself in the right.
Bank: "I will not succumb to unrealistic demands so that they will have the privilege to use our ATM network and other perks for their own pleasurable use and would rather avoid this [...] customer."

Also, here you go: http://www.investopedia.com/terms/l/ledger-balance.asp
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