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Plan Well, Retire Well

Saving and investing your money

Bank Fees -- Check Your Costs


There's a lot of buzz lately about fees at financial institutions such as banks, and it may be time for you to take a close look at your checking account statement and see how much you're paying for your account.

Why the recent buzz?  Did you know that every time you use your debit card, merchants are charged an average of 44 cents?  You may not have been aware of this cost, but this was a fee that was likely passed along to you in the cost of goods and services you used. Does that sound high to you?  Well, it does too many people. And now, due to a new federal regulation, starting October 1st the fee for using a debit card will be limited to about 21 to 24 cents per swipe.

People are busy speculating what this will mean for you, the consumer. Of course, there are costs to have a financial account and financial institutions are looking for ways to pay for these costs. Thus, instead of hidden costs like high debit card use fees, we are now seeing more fees.

These fees could end up being expensive for you – especially if you don't pay attention to what you're paying for. But, the good news is that they are fees you can see (not hidden) and you can make choices to avoid the fees. What can you do?

1) Decide which services that financial institutions offer are important to you.

  • For example, do you like to do business in a building or would you rather conduct business online?
  • Which tools do you use daily? For example, are you a heavy user of debit cards?  Or, do you use your ATM frequently for cash?
  • Do you depend on receiving a paper statement or would an electronic one be fine?

2) Once you know which services you want, shop around to find a financial institution that offers the best deal that fits your needs. Don't pay for services you don't use and try to find a place with no or low fees for the services you do use.

3) Ask your financial institution if there are ways that you can avoid fees.

  • For example, direct depositing your paycheck to your account may reduce fees.
  • Or, maintaining a minimum monthly balance may keep costs down.

4) Check out different types of financial institutions. Different institutions in different locations will offer different services – don't assume they're all the same. Ask about no-frill, free accounts and see what each institution has to offer you.

Checking accounts (like many financial products) come in lots of different configurations. It's up to us to find one that has the services we want to use at a reasonable cost. Take a look at your financial statement and see if you have any fees that you hadn't noticed before.  Let me know what you find -- I'm curious to learn more about the new fees that may or may not pop-up in the next few months!



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COMMENTS



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I recently opened a checking account at the University of Illinois Employees Credit Union. I soon noticed that an additional $1.00 was being withdrawn for some purchases using a debit card. A bank officer told me that some vendors don't want to pay the "44 cents per swipe" charge, so YOU have to pay it at the rate of $1.00 per swipe. To avoid this charge, I was advised to select "credit" rather than "debit" when paying by card.
by Linda Pein on Saturday 9/3/2011

That's a good example of how important it is to check your bank, credit card, or other financial statements. Many fees can be avoided, if you just know what triggers them.
by Karen Chan on Thursday 9/8/2011

I am a small business owner, and I have never heard that any business can legally "refuse" to pay swipe fees. If I could refuse, believe me, I would do it in a heartbeat! Double check with your credit union: They MAY be feeding you a line & trying to push the blame for the fee off on vendors.
by T Lewis on Thursday 9/29/2011

Ever since the big banks began testing debit card fees, credit unions have been presented as their virtuous counterpart whom consumers have been directed to entrust with their money. However, the story is much more complicated than that. See, credit unions were exempted from the Durbin Amendment and as a result they have no revenue shortfall to make up for. It's important to keep in mind that credit unions may not be charging their customers any debit-related fees, but the fees they charge retailers accepting their debit cards are now much higher (83%, to be exact) than what big banks charge. So we should not be losing sight of the issue that got the whole thing started ? the size of the interchange fees. The way I see it, the issue is a very simple one. If a fee charged by one bank to a retailer is considered too high, it should also be considered too high if any other bank charges it to that retailer. I just can't see it any other way and I can guarantee you that retailers see it exactly the way I do. http://blog.unibulmerchantservices.com/credit-unions-muscle-in-on-big-bank-territory
by J. G. on Monday 10/31/2011