Bank mailed me letter, $5 fee starts in June

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

Postby Sunny Sarkar » Thu May 02, 2013 12:39 pm

Although I agree that $300 is not much of a balance that can't be maintained, and also that we consumers are a bit spoiled when it comes to free checking (it's a service after all, so why shouldn't we pay a fee for it?), I think you can simply move to USAA Bank checking or Fidelity Cash Management account - they have free checking, free universal ATM withdrawal with all fees reimbursed, free checks, free bill bay, remote check deposits by phone or computer (plus free deposits via UPS for USAA bank), great customer service, online banking, yada yada yada - all free and no hassles.
"Cost matters". "Stay the course". "Press on, regardless". ― John C. Bogle
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Re: Bank mailed me letter, $5 fee starts in June

Postby bUU » Thu May 02, 2013 12:40 pm

frugaltype wrote:I can't imagine what they're doing with that money. Perhaps they are averaging their costs over all their customers with no regard for what an individual customer costs them.

Given that the fees are quoted based on the account, and publicly advertised on printed flyers, why would you think it is so carefully customized as to be based on individual usage?

How would that even work? Have the fee schedule flyer distributed in the bank somehow guess who you are and have the ink on the paper rearrange itself in response? :)
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Re: Bank mailed me letter, $5 fee starts in June

Postby gerrym51 » Thu May 02, 2013 12:43 pm

all i can say is my bank would charge a fee at 300.00
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Re: Bank mailed me letter, $5 fee starts in June

Postby TomatoTomahto » Thu May 02, 2013 1:16 pm

prudent wrote:
frugaltype wrote:I agree with the OP.

I would like to know what a $300 account costs a bank, if they don't issue paper statements.

Unless the customer is traipsing in there or taking up phone time, my guess is check processing time, which I will bet is largely automated for large banks. And the customer is not writing a lot of checks at that amount. So, in the noise. Plus today's $300 customer is tomorrow's larger customer if they are treated with courtesy.


One source http://www.bankrate.com/financing/banking/banks-losing-big-on-free-checking/ says it costs banks about $350 a year to maintain a checking account. However, one can argue whether overhead should be part of that number, and perhaps marginal cost should be the more applicable cost.

So from the bank industry side, http://www.americanbanker.com/bankthink/free-checking-retail-banking-1045039-1.html they believe subtracting the overhead cost would indicated a cost to the bank of about $280 a year for a checking account.

I would have thought that the overhead would be a larger component of the cost. I don't disbelieve the $280/year, but I'm having a hard time figuring out how the non-overhead adds up.
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Re: Bank mailed me letter, $5 fee starts in June

Postby dm200 » Thu May 02, 2013 2:19 pm

From the bank or credit union's point of view, the costs, ON AVERAGE, for an under $300 account are not trivial, even if paper statements are not mailed. There is probably no reliable way to predict the costs on most such low-balance accounts, so depending on averages probably makes sense. Various kinds of situations may require manual intervention on such an account. If the customer calls the support desk about an issue, that is staff time, as well as handling queries in the branch. At least every month (perhaps more often) the bank or credit union has to run a compare file of all the customers against a "bad guy" list of suspected terrorists and money launderers. The IRS may want interest withheld. in-person transactions are an expense, as are ATM transactions. In almost every situation, it seems to me, on its own, a $300 balance account is a money loser for the bank or credit union. The bank or credit union would look at overriding factors in keeping such accounts. Perhaps they want to be known as consumer-friendly, or keeping such accounts for organizations like the Boy Scouts or PTA help get more profitable customers.

Also, they would make money if this account holder took out a loan.

So, in my opinion (being in this business), for someone to say that the bank or credit union "makes money" on $300 accounts is "ill informed", to say the least.
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Re: Bank mailed me letter, $5 fee starts in June

Postby TomatoTomahto » Thu May 02, 2013 3:12 pm

dm200,

I don't doubt that this account is a money loser. I'm also aware that many factors create costs (regulatory requirements, statement production, bill pay (especially if they have to mail a check), etc.) Since you're in the business, do you have a sense of what comprises the $280/year/account cost? Apparently $70 per account/year for overhead is already subtracted.
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Re: Bank mailed me letter, $5 fee starts in June

Postby TomatoTomahto » Thu May 02, 2013 5:24 pm

Coincidence: I opened my mail today, and TD Bank mailed me that "the minimum daily balance to waive the $10 monthly maintenance fee will increase from $100 to $250. (If you're enrolled in online statements only, the fee is $9.) Because you typically maintain more than this amount, you won't be impacted by this change, as long as you keep at least $250 in your account. There is nothing else you need to do."

I get nervous if my balance falls below $1000 or more (sometimes people are slow depositing checks and it's a surprise when they show up), so this won't be a problem. And, given what money markets pay, I'm not actively managing my DDA/MM accounts to maximize interest.
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Re: Bank mailed me letter, $5 fee starts in June

Postby Equitius » Thu May 02, 2013 5:51 pm

I'd drop your bank like a hot potato, regardless of the sum you have "in their vaults."
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Re: Bank mailed me letter, $5 fee starts in June

Postby Equitius » Thu May 02, 2013 7:14 pm

Sunny Sarkar wrote:Although I agree that $300 is not much of a balance that can't be maintained, and also that we consumers are a bit spoiled when it comes to free checking (it's a service after all, so why shouldn't we pay a fee for it?)


The bank earns money on my savings, of which it only gives me a small portion, that's why.
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Re: Bank mailed me letter, $5 fee starts in June

Postby rec7 » Thu May 02, 2013 7:16 pm

At our local credit union for $5.01 that is all is takes to have a savings and checking account. It takes $5 in savings and checking is .01 There will be no fee's at this level. This is just a small example why I am a credit union fan they just seem to be better in every area.
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Re: Bank mailed me letter, $5 fee starts in June

Postby dm200 » Thu May 02, 2013 10:33 pm

Equitius wrote:
Sunny Sarkar wrote:Although I agree that $300 is not much of a balance that can't be maintained, and also that we consumers are a bit spoiled when it comes to free checking (it's a service after all, so why shouldn't we pay a fee for it?)


The bank earns money on my savings, of which it only gives me a small portion, that's why.


The bank, net of expenses, is not earning squat on your $300. In addition to the costs I enumerated earlier, banks pay a percentage of insured deposits to the FDIC and credit unions to the NCUA. The NCUA fee has not been set yet, but estimates are about 10 basis points. So, reduce their return by that amount. I think it is similar for the FDIC.
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Re: Bank mailed me letter, $5 fee starts in June

Postby Random Musings » Thu May 02, 2013 10:52 pm

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.


Didn't read the replies on this, but the first thing that came to mind is that you have free will and can change banks.

The second thing that came to mind is that an average monthly balance of 300 smackers is not asking too much. The financial incentive for banks to hold very small accounts for free is low.

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

Postby tfb » Fri May 03, 2013 3:49 am

Equitius wrote:
Sunny Sarkar wrote:Although I agree that $300 is not much of a balance that can't be maintained, and also that we consumers are a bit spoiled when it comes to free checking (it's a service after all, so why shouldn't we pay a fee for it?)


The bank earns money on my savings, of which it only gives me a small portion, that's why.

The bank earns money on your savings because it takes risks. You can earn the same if you take the same risks. Buy bonds, lend to borrowers on LendingClub, ... You are not taking those risks when you deposit money with the bank. That's why the bank isn't sharing with you.
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Re: Bank mailed me letter, $5 fee starts in June

Postby bUU » Fri May 03, 2013 4:18 am

Random Musings wrote:Didn't read the replies on this, but the first thing that came to mind is that you have free will and can change banks.

True, though one may expect that, over time, like with many other things, such changes could become the norm, and perhaps even the only reality.
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Re: Bank mailed me letter, $5 fee starts in June

Postby deanbrew » Fri May 03, 2013 7:17 am

Random Musings wrote:Didn't read the replies on this, but the first thing that came to mind is that you have free will and can change banks.

The second thing that came to mind is that an average monthly balance of 300 smackers is not asking too much. The financial incentive for banks to hold very small accounts for free is low.

RM


How dare you just pop in and post a rational three-sentence reply without reading all 112 prior posts? Haven't you learned the established rules of interweb message board bickering by now?
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby happymob » Fri May 03, 2013 8:16 am

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

Victoria

PLenty of small towns don't have credit union. The closest brick and mortar credit union to me, for example, is a 60 minute drive away.
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Re: Bank mailed me letter, $5 fee starts in June

Postby Random Musings » Fri May 03, 2013 8:25 am

deanbrew wrote:
Random Musings wrote:Didn't read the replies on this, but the first thing that came to mind is that you have free will and can change banks.

The second thing that came to mind is that an average monthly balance of 300 smackers is not asking too much. The financial incentive for banks to hold very small accounts for free is low.

RM


How dare you just pop in and post a rational three-sentence reply without reading all 112 prior posts? Haven't you learned the established rules of interweb message board bickering by now?


I usually read most threads to gain knowledge, but this one seemed like a no-brainer. Which works for me, since I have no brain. :oops:

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

Postby winglessangel31 » Fri May 03, 2013 8:32 am

Random Musings wrote:
deanbrew wrote:
Random Musings wrote:Didn't read the replies on this, but the first thing that came to mind is that you have free will and can change banks.

The second thing that came to mind is that an average monthly balance of 300 smackers is not asking too much. The financial incentive for banks to hold very small accounts for free is low.

RM


How dare you just pop in and post a rational three-sentence reply without reading all 112 prior posts? Haven't you learned the established rules of interweb message board bickering by now?


I usually read most threads to gain knowledge, but this one seemed like a no-brainer. Which works for me, since I have no brain. :oops:

RM


If only you read the replies, you'd see
Faith20879 wrote:I don't have anything new to offer, except this old tune:

"Toto, we ain’t in Kansas no more."

Regards,
Faith


http://www.youtube.com/watch?v=wg66kwRnOpw
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby dm200 » Fri May 03, 2013 9:37 am

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

Victoria

PLenty of small towns don't have credit union. The closest brick and mortar credit union to me, for example, is a 60 minute drive away.


As the smaller credit unions shut down, merge or are forced (often with good reason) out of business by the state and federal regulators, many areas are left without local, brick and mortar credit union services. On the other hand, more and more things can be done without going to a branch in person. many credit unions offer online account opening, with some documents sent by mail. ATMs and service kiosks can offer many credit union services as well. A few credit unions, like some banks, are opening small "branches in retail stores (or similar). With cell phone cameras, many credit unions are also offering "deposit your check with your smart phone", and many credit unions are part of no-surcharge ATM networks. These things change, in one direction or another, often -- so if there are not credit union services today, check every few months and there might be.
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby scubadiver » Sun May 05, 2013 9:27 am

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

Victoria

This is most certainly not a universal truth. We recently dropped our credit union for Wells Fargo. The credit union sent us the "we're gonna start charging $5 / month unless you...." letter. We had a safe deposit box with them and a combined checking / savings account balance of ~$1500, but were not even close to their minimum requirements to avoid the fee. With Wells Fargo we were able to avoid much of that nonsense because we have a mortgage with them which we are now refinancing to a new 30 year note at a lower rate. My wife and I will probably open up a joint credit card with them as well. The moral here is that if you are a customer with large multiple accounts (a $300K mortgage helps), the rule that credit unions are better is far from a hard and fast rule.

All that said, most of our banking (bill paying, check cashing, etc) is done through a credit union associated with my first employer out of college. We have $15-20K in checking, savings, CDs, etc, not to mention a VISA that we use for pretty much everything, and they treat us fairly well. I might say extremely well. Again, we have much more than a $300 pittance invested with them.

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

Postby dm200 » Sun May 05, 2013 9:54 am

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

Victoria

This is most certainly not a universal truth. We recently dropped our credit union for Wells Fargo. The credit union sent us the "we're gonna start charging $5 / month unless you...." letter. We had a safe deposit box with them and a combined checking / savings account balance of ~$1500, but were not even close to their minimum requirements to avoid the fee. With Wells Fargo we were able to avoid much of that nonsense because we have a mortgage with them which we are now refinancing to a new 30 year note at a lower rate. My wife and I will probably open up a joint credit card with them as well. The moral here is that if you are a customer with large multiple accounts (a $300K mortgage helps), the rule that credit unions are better is far from a hard and fast rule.

All that said, most of our banking (bill paying, check cashing, etc) is done through a credit union associated with my first employer out of college. We have $15-20K in checking, savings, CDs, etc, not to mention a VISA that we use for pretty much everything, and they treat us fairly well. I might say extremely well. Again, we have much more than a $300 pittance invested with them.

Scubadiver


Yes, this is true. Although I am a big advocate for and proponent of credit unions, I still have dealing with banks that might better fit my needs. I recently opened a checking account (no fee) at a very convenient regional bank branch, that I use for cashing checks. To avoid fees, I did need to do a direct deposit of a small retirement check (less than $200 per month).
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Re: Bank mailed me letter, $5 fee starts in June, criminal.

Postby Alskar » Wed May 08, 2013 4:43 pm

LadyGeek wrote:
Alskar wrote: I get 3.00% APR interest on the first $25K in my checking account at my credit union if I jump through a few easy hoops (12 debit/credit transactions per month, electronic statements, 1 ACH transaction, etc)... That's over $750 a year for almost no work.

Math check: I assume you get 3.00% APY. ($750 = $25k * 0.03)

Oops. My bad. You're correct. Unfortunately, my CU just lowered the interest rate to 2.25% APY.
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Re: Bank mailed me letter, $5 fee starts in June

Postby Teetlebaum » Wed May 08, 2013 8:52 pm

Random Musings wrote:
deanbrew wrote:
Random Musings wrote:Didn't read the replies on this, but the first thing that came to mind is that you have free will and can change banks.

The second thing that came to mind is that an average monthly balance of 300 smackers is not asking too much. The financial incentive for banks to hold very small accounts for free is low.

RM


How dare you just pop in and post a rational three-sentence reply without reading all 112 prior posts? Haven't you learned the established rules of interweb message board bickering by now?


I usually read most threads to gain knowledge, but this one seemed like a no-brainer. Which works for me, since I have no brain. :oops:

RM

OK, I read all the posts, and I agree: either find another bank, or pay the fee if this is the most convenient bank.

When do I get paid for all that hard work?
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