It’s important to look for more than the best rates when comparing different bank deals. You also need to examine what types of fees will be involved before signing up for an account. For instance, the largest U.S. banks have raised fees, added new fees, and decreased time limits for triggering fees when banks pay overdrafts, according to a recent survey by the Consumer Federation of America (CFA).

Banks charge a flat fee for overdraft protection, which basically loans money to an account holder when there isn’t enough money to cover transactions such as paying checks, debt card purchases, or ATM withdrawals. In many cases, people receive no notification about the overdraft until after the fact. If they are unable to repay the overdraft amount plus the fee, additional fees may be charged.

The median overdraft fee is $35 for the top 16 U.S. banks. Nine of those banks have a tiered fee system if there is more than one overdraft on an account. Also, 10 of the banks don’t limit the number of overdrafts that can occur in one day, so account holders can get hit with multiple overdraft fees. These fees are so pervasive that U.S. banks are expected to collect $38.5 billion in overdraft fees this year, according to Moebs Services, a research firm.

Don’t just choose an account based on a table of the best rates. Read the fine print of any bank deals you are considering so you understand all the terms.

3 Comments »

1. 

   Yea, recently closed a bank account due to the small writing. Will be checking it in future

   Comment by mike — August 25, 2009 @ 6:45 am

2. 

   Be careful with One West . don’t believe what the claims managers say on the phone .I have had nothing but problems with that bank. I got over 100 G with them and they can’t find my signature card and they are taking their time sending another one . I should have had a check in the mail for my account balance this Monday instead I was forced to take the mature CD and place it in a Money market with them at a low rate until I have another bank ACH .my money out.

   I was also told that if I keep my money with One West they would give me a 2.25 - 10 month CD . Now One West said they cannot find that info attached to my account.

   The manger I had problems with used the name Randy.

   Be careful this was Indy Mac before it went under probably the same people working here.

   Just sharing my unpleasant banking experience . Good luck everyone

   Comment by Mike — September 4, 2009 @ 10:49 am

3. 

   Banks make most of their money from the overdraft fees generated by customers that cannot keep track of their money. They will stop offering free accounts and will charge other fees to make up for it if legislation is passed.

   What’s so difficult about keeping track of how much you have? This is the example I give customers all the time: You have $100 in your checking account (nothing pending). You use your card at Walgreens for $10, Gas $30, Burger King $10. You have to immediately subtract these transactions from the $100 that you have in the bank. You now have $50 available, even though your account shows you have the full $100. Merchants take their time in actually going into the bank and taking their money. We have no control over how long it takes them to come in and take their money.

   It is not the banks responsibility to keep track of your money. If you call the bank after the prior example and you are told you have $100, you CANNOT go and spend that $100 because you know that you have to deduct the $50 that you spent that day. You many not see that $50 deduction taken from your account for 2 or more days but you can no longer count on that money.

   Keep a small notebook with you or record the transactions in your cell phone at all times so that you don’t lose track.

   The only thing that I have linked to my account is my direct deposti. I don’t have any automatic payments taken from my account because I know that companies don’t always withdraw their payments on the day that they are supposed to and they sometimes mess up on the amount. I pay all my bills with my bank’s Bill Pay and I control when the payment is sent.

   It really is simple.

   Sorry for the long post but I get calls like this daily screaming at me because the purchase at Walgreens was 4 days ago and it just now got deducted from their account and overdrew the account because the customer kept spending money. It’s not the bank’s fault.

   Comment by Minnie — October 27, 2009 @ 8:12 pm

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