The Higher Costs of Banking...And How To Avoid it!

Those of us old enough remember the early 1980s. Interest rates were high, which made borrowing money from and paying it back to banks extremely costly. The upside to this was that banks also paid out higher interest on personal saving accounts, which was only fair since banks were making money off of the personal deposits of its depositors, both large and small. However, to offset the higher interest they were paying to customers who had savings accounts with their banks, small banks began imposing fees on these accounts. Then in the late 1980s, these small banks began to lure customers with free checking when their customer base began to thin out. Soon, the larger banks got into the act as they tried to siphon off the increasing numbers of customers the smaller banks winning over. The result was that by the mid- to late 1990s, free customer checking had become a banking industry standard.
But in recent years, the trend has been reversing. According to figures released by a Bankrate Inc. survey last month, only “39% of noninterest checking accounts are free to all customers, down from 45% in 2011 and a peak of 76% in 2009.” And although last-year’s public outcry forced banks to back away from the imposition of new fees when they were proposed last year, it hasn’t stopped banks from doubling-down on existing fees. The majority of banks have raised their fees on ATM transactions, checking account overdrafts, and minimum-balance amount fees. The result is a landscape of new and oftentimes imaginative fees. For example:

• The recent fee change at SunTrust has resulted in a $36 fee on all basic checking overdrafts, an increase from the $25 for-the-first overdraft, and $36 for each subsequent payment.

• Wells Fargo customers must now keep $1,500 in their basic checking accounts or make $500 in direct deposits each month to avoid a $7 monthly fee.

• U. S. Bank will charge a $15 fee for an overdraft transaction that is $15 or less, and $35 for any overdraft over that amount.

• In June, Fifth Third Bank began charging $37 per overdraft after a $25 fee is assessed for an initial overdraft transaction. This replaces old policy of charging a $33 fee for the second, third, and fourth overdrafts in a twelve month period.

 The reason often cited for the introduction new banking fees are simple. For starters, we must remember that banks are in business to seek profit. As such, they are beholden to their shareholders to ensure that turning a profit is the end result of their daily business transactions. Secondly, banks are attempting to recoup losses as a result of federal legislation in the form of the so-called Durbin Amendment.
The amendment, a last-minute addition to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 cap on the fees bank could charge retailers such as Target each time a customer used their debit card there. The bill lowered swipe fees – the fee charged to merchants every time a customer pays with plastic – on debit cards issued by big banks. Whereas before the introduction of the Durbin Amendment, debit-card issuing banks would take a small percentage of that total from retailers whenever a customer would make a purchase with their debit cards, banks are now limited to charging retailers roughly 23 cents per swipe. That particular lowered revenue stream for banks forced them to make up the profit loss in—you guessed it—charging you and I higher fees as the cost of doing business with banks.

Click to enlarge graphic

The result is a list of big banks charging higher fees.  Examples include:

1. Bank of America 

• Checking: $25 deposit to open; $8.95 monthly fee unless statements are paperless and deposits/withdrawals are done online or by ATM. 

• Debit Card: Included with all checking accounts (no additional fees). 

2. Wells Fargo 

• Checking: $100 deposit to open; $5 monthly fee unless direct deposit or average balance of $1,500. 

• Debit Card: Included with all checking accounts (no additional fees). 

3. J.P.Morgan Chase 

• Checking: $25 deposit to open; $12 monthly fee unless direct deposit of at least $500, minimum balance of $1,500 or $5,000 average daily balance in linked accounts. 

• Debit Card: Included with all checking accounts (no additional fees). 

4. Citigroup 

• Checking: $0 to open; $10 monthly fee unless balance of at least $1,500 in prior month or one direct deposit and one bill payment each month. 

• Debit Card: Included with all checking accounts (no additional fees). 

5. US Bank 

• Checking: $50 to open; $6.95 monthly fee with online statements or $8.95 with paper statements unless direct deposits of at least $500 or average account balance of $1,500. 

• Debit Card: Included with all checking accounts (no additional fees). 

6. PNC 

 • Checking: $25 to open; no monthly fee. 

• Debit Card: Included with all checking accounts (no additional fees). 

7. TD Bank 

• Checking: $0 to open; $2.99 monthly fee with online statements or $3.99 monthly fee with paper statements. 

• Debit Card: Included with all checking accounts (no additional fees). 

8. Capital One 

• Checking: $50 to open; $8.95 monthly fee unless $300 minimum daily balance or monthly direct deposit of at least $250. 

• Debit Card: Included with all checking accounts (no additional fees). 

9. SunTrust 

• Checking: $100 to open; $7 monthly fee unless minimum balance of $500 or direct deposit. 

• Debit Card: Included with all checking accounts (no additional fees). 

10. BB&T 

• Checking: $50 to open; $10 monthly fee unless direct deposit of at least $100, $1,500 average balance or a mortgage with BB&T. 

• Debit Card: Included with all checking accounts (no additional fees). 

So how can you and I avoid paying higher fees for the cost of banking? First, watch a recent segment (below) from NBC’s “Today Show” for starter for some tips.

Second—and in the immortal words of Smokey Robinson—“shop around!” Banks by law must make their account fee schedules available for you. I’ve already provided a partial list of the largest banks and their customer account fees.
Some banks have policies that result in few, if any problems in accessing their information on their checking account fees.  However, there are banks with whom you may have to dig a little deeper than picking up a simple brochure in one of their branch offices (see:  "Banks That Play Hide-the-Fee, And Those That Don't").  Also, consider the following suggestions:

-Consider a credit union.  Credit unions are not-for-profit, and aren't under pressure to nickle and dime their customers to satisfy their stock-holders.  For the most part, their account fees are usually lower than banks, and their overdraft fees tend to be better.
-Bank online.  Big banks typically maintain a physical presences in the form of a building and their branch offices...which cost them money to maintain.  Guess where the cost of maintaining these money houses is shifted?  Online-only banks often have the best terms and conditions. Because some of these banks have no physical branches to maintain, they are able to offer better rewards and charge fewer fees. However, many traditional banks have online-only accounts too. Bank of America’s eBanking account has no minimum balance requirement and waives the monthly fee if you agree to do all your banking via the Internet and ATMs.
-The most obvious--Meet the minimum or average balance requirements. This is easiest way to avoid the monthly fee at banks.  Maintain the minimum balance, and avoid withdrawals which result in lowering the balance below this point, except in emergencies. Shop around for the banks with lower minimums.
-If your one of those individuals who has no problem maintain larger balances, consider depositing your money into an interest checking account. Most banks do not pay interests on accounts unless you are able to maintain the monthly (or daily) minimum.
-Sign up for direct deposit. If you can’t maintain the minimum monthly balance requirement, you may qualify for free checking by authorizing one or two direct deposits to your account each month. If you get a regular paycheck, your employer or sponsoring agency can help you set it up. Like a minimum balance requirement, direct deposit encourages you to keep money in your account, and banks like that. It tells them they can invest your money and use it to make loans, so your account is more likely to be profitable without extra -Avoid overdraft protection. This is one of the biggest rip-offs to banking customers there is. Don't be afraid to ask the banks you're interested in whether they require their customers to have this service (as a result of the Electronic Fund Transfer Act, bank customers must now choose whether or not they want to opt into overdraft protection).  If they don't, by all means consider this bank seriously.  Otherwise, avoid this "protection." The average overdraft fee is $20 to $30 per transaction.
-Look into banks which offer special discounts to college students, seniors, veterans, or other groups. That alone is worth at least four lattes. Chase, for example, offers a checking account especially for college students that works just like their regular Total Checking account, except it will waive the monthly fee for students.

If you find yourself on the verge of being nickled-and-dimed into living paycheck-by-paycheck—the death of a thousand financial paper cuts—you don’t have to settle! If you don’t like the account you have now, or don’t like what you’re paying, by all means change banks! Don’t like the way your bank is treating you? Can’t set up direct deposit or meet the minimum monthly balance requirement? Take a look at what’s available in your neighborhood; your local credit union or community bank may be able to offer you a better deal. I It’s your money, so make sure it works for you.

Video: The Best Times to Buy, Sell, & Save

This morning on CBS' Morning Show, author Mark DiVinchenzo was interviewed about his new book, "Buy Shoes on Wednesday and Tweet at 4:00: More of the Best Times to Buy This, Do That and Go There." In his book, DiVinchenzo reveals little-known optimal times consumers can maximize both savings and services as they seek make the most of their hard-earned dollars. In the video (below), he gives viewers a sample of the ways by which they can save as they shop around.

Thinking About Unemployment...

During the current economic climate, symbolized by extended period of unemployment, those seeking employment should not only invest as much time as possible in trying to secure employment, but engage in introspection insofar how they are going to survive.
Additionally, for those fortunate to have not lost their employment during the economic downturn, should likewise consider how they are going to survive the inevitable economic "rainy days" that will come at some point. I found an interesting graphic, courtesy of this morning's edition of USAToday that should get you to thinking on this point.

Healthy Food Shopping - Vegetables (Part Two)

In giving the world my 2-cents in how best to pinch pennies and save money, I have to work around my personal dilemma; How to maintain good health while spending hard-earned money in a way which doesn't break the bank.
In one of the cruel ironies of our market economy, it's actually cheaper purchase unhealthy foods than to purchase more healthy foods which prolong our lifespans. In the short-term, processed foods, complete with their empty calories and dangerous levels of unhealthy fats help us make it from paycheck to paycheck with a small level of financial peace-of-mind. In the long-term, they will impact our general health, which potentially adds another dimension to our life's problems, that of the impact health care costs to address issues tied to our diets.
Healthy eating is a little more expensive, but has the opposite long-term payoff. And there are ways to circumnavigate the confusing maze of thinking required to lessen the financial strain of healthy eating. such as when shopping for healthy eating, stick to the outside perimeter of your local grocery store...where fruits, vegetables, and the more healthy selections are stocked).

Watch the following segment from a recent NBC's The Today Show for other tips.

Taming Those Medical Bills

So I’m watching CBS Saturday Morning this morning, and a very interesting segment aired. The segment spotlighted a way in which to save money on the many medical billing mistakes that are apparently found when we pay for medical procedures. As I watched this segment, I began to think about aspects of the current health care regime in America.
When it comes to socio-political human behavior, two related questions have always plagued me: Why do people do things which they know will adversely affect their health, and how is it that in a nation where upwards of 2 million people a year declare medical bill-related bankruptcy how some people can be so against universally affordable health care insurance? In fact, one of the things that I’ve always personally campaigned for in my writings is the necessity for universally affordable health care insurance. Slam the notion as “socialism,” “health-care rationing,” or whatever narrow ideologically-driven level of thinking you want…the wallets of many Americans will be comforted by this notion.
But next to the pipe dream of totally free health care, the next best thing in helping us pay our medical bills is the reality that there are apparently businesses in America which help customers interested in their services find many of the overcharges which between 40-80 percent of all medical bills contain ("How to Fight a Bogus Bill"). In addition to watching the video segment from this morning’s segment of CBS Saturday Morning,

I have taken the liberty of posting—in addition to some of the advice that I’ve received—other colorful options for helping Consumers curtail high medical bills.

- Despite the reality that you have other financial responsibilities—housing, utilities, food, childcare, etc.—every effort should be made to pay medical bills. Because bill collectors have become so much more aggressive in attempting to collect owed debt (see: "Debtor's Prison 2.0" for example), ignoring this responsibility will not make it or the consequences go away.

- Paying off large portions of a medical bill (or the bill in its entirety) could be even more beneficial to you beyond the obvious. Many doctors, clinics, and hospitals will generally offer a 20-30% off medical bills if you can pay them off in a shorter period of time, so by all means seek to negotiate (to help accomplish paying off my own medical bills, I was lead to a third party company, like Access One, which I took advantage of by doubling and sometimes tripling the payments in order to erase my payment obligations 2 years before the 36 month projected payoff date).

- On the point of negotiating bills (the basis of the video which spurred this particular posting), many times you can talk directly with your hospital billing department, doctor's office or medical clinic to gain more favorable payment options (my sister once negotiated with a dentist office to have her medical bill cut by $600; she was paying in cash for services). The fact that doctors and hospitals don’t want to send any unpaid debt to collections—only to potentially collect at a loss 80 cents or less on the dollar—operates in your favor with any negotiation efforts.

- On the point of negotiating bills (the basis of the video which spurred this particular posting), many times you can talk directly with your hospital billing department, doctor's office or medical clinic to gain more favorable payment options (my sister once negotiated with a dentist office to have her medical bill cut by $600; she was paying in cash for services). The fact that doctors and hospitals don’t want to send any unpaid debt to collections—only to potentially collect at a loss 80 cents or less on the dollar—operates in your favor with any negotiation efforts.

- Knowing full well that some proud individuals may avoid this next suggestion like the plague, consider the assistance of state and/or federal government-based programs to help defray or even pay your medical debt/bills. Both Medicaid and Medicare programs, dependent upon the circumstances, could be a literal life-saver in helping to address medical costs. The eligibility requirements for Medicaid varies state-by-state, but generally provides complete coverage
for low-income families (in addition to income, eligibility factors include age, pregnancy status, disability status, income, citizenship, and assets). Medicare (also based on certain requirements) is for individuals above 65 or for young individuals who are disabled. In addition, each state has a State Children Health Insurance Plans (SCHIP) which offers subsidized health insurance for children who don’t otherwise qualify for Medicaid.

- Every hospital has a financial aid or charity department (required by law for those who want to retain or are seeking non-profit tax status). These departments can be a helpful source in helping particularly hard-luck cases. There are also plenty of other non-profit organizations that provide help with medical bills. In either case, like with government programs, you need to meet certain requirements to qualify for financial assistance.


To summarize, if you can make small payments, the reality is that each option has its advantages and disadvantages. If you can make any kind of consistent payments, self-negotiation or working with a medical debt reduction specialist (i.e., outside/third-party negotiators) are your best options. If you cannot make a payment, government programs, charities and financial aid departments should be contacted.

Groceries & Credit - Expect To Pay More Soon!

One of the problems with having a mortal existence is that, in spite of the ever-constant grind to secure our material needs, many things are simply beyond our control. Two of these things are market forces and the weather. And when these two forces combine, we are often left stranded on the intersection of supply and demand, and market expectations. The result is usually a choice of us consumers having to deal with less of what we want/need, or having to pay more. In two particular cases from last week, consumers can soon expect to pay more due to instances of things being beyond our control.
Late last week, the major credit card and many of the nation's retailer reached a record settlement in a long-running lawsuit that alleged the card issuers conspired to fix the fees that stores pay to accept credit cards. Visa, MasterCard and banks agreed to pay retailers at least $6 billion in a 10-year case that alleged the card issuers conspired to fix the fees that stores pay to accept credit cards.
Called by lawyers involved in the case the "largest antitrust settlement in U.S. history," the settlement is seen as a major victory for merchants that have long complained about the billions of dollars in so-called "swipe" or "interchange" fees that they pay to banks for purchases made using plastic. But at a time when shoppers increasingly are using credit and debit cards, merchants will face a dilemma: Whether to charge shoppers extra for using plastic, and if so, how to do so without angering them.
As part of the settlement, announced last Friday, retailers will be allowed to charge customers more if they pay using a credit card, just as many gas stations do currently. The upshot...expect to pay more every time you swipe your credit and debit cards.
The winners in this Big Money settlement: the major credit card issuing banks and retailers! The losers...you and I as consumers. The advice here is to avoid being nickeled-and-dimed by banks for using debit and credit cards, and use cash whenever possible



Late last week, the National Climatic Data Center announced that 55% of the country “was in a moderate to extreme drought” ending for the month of June; no improvement in this condition is predicted for the month of July. The immediate result is horribly-impaired yields and major plant damage to many water-dependent crops, including soybeans, corn, and wheat…the latter two being hit particularly hard. The intermediate result is the expected rise in prices we will all be feeling in the coming months. Current trends portent this impending reality.
As of this writing the price of corn is already up 38% in price, while wheat is up 29%, both due to the current drought. What’s more, there is a better than good chance that we will experience record beef prices in the near future because of the rising prices of feed, and the time it takes for shrinking beef yields to recover.
And with food-themed occasions such as Thanksgiving and Christmas in the not-too-distant future, expect to spend more about that time of year…and not just on gifts. The time to plan ahead is now.

For a detailed explanation of this year's drought effect on farm crops and food prices, watch the video:

Pain At The Pump, And What You Don't Know

With the arrival of summertime and the reality that more drivers are on the roads, many of us as consumers find ourselves victimized in the wallet by fluctuating gasoline prices. And on the high end of fluctuating gasoline prices is a fact based on simple physics; that the heat and humidity of the summer translates to lower gas mileage for the overwhelming majority vehicles on the road.
Simply put, when gasoline gets hot, it loses a portion of its energy. The result is our cars get fewer miles per gallon. To illustrate, when we fill up our gas tanks when it is 60 degrees, the typical car can travel up to 500 miles. But fill it up when it's 90 degrees and you get 10 miles less out of that same tank. Now I know that 10 miles less a fill-up doesn’t seem like much, but add it up over a period of a year, factor in the additional extra unpaid miles posted on our odometers, and multiply this by the millions of cars and car owners who are equally as affected by the same reality, and you get an extra $1.5 billion a year (according to a 2007 Congressional report) that we as consumers pay during the warmer summer months—more profit for oil companies who are already raking in record profits every quarter. In effect, we consumers pay the same price for less gas at certain times of the year. And I needn’t have to tell you that in these lean economic times, every penny, every financial advantage could literally make the difference between making it to the next payday with a few dollars left in hand or not.
And although it seems like there is little that consumers can do about the laws of physics, there is actually a money-saving measure that is open to both gas stations and customers. For the last 20 years or so, 90% of Canadian gas stations have been using pumps which measure gasoline output, and automatically make adjustments for temperature. The result? When it’s hot, customers receive more gasoline for their money.
In America, and sadly as you might suspect, these pumps are only not widely available to motorists, but their installation has been and continues to be fought by gas station owners. "We simply don't agree that the juice is worth the squeeze," said Dan Gilligan, an official from the Petroleum Marketers Association of America. Gilligan insist that installing these pumps at most gasoline stations would result in consumers paying more for gasoline anyway in the long run. "Putting a $2.4 billion cost on gas station owners would only transfer $2.4 billion to the consumer," cited Gilligan, as stations sought to recover the costs of doing so.
Some driver’s disagree, so much so in fact that a class-action lawsuit has been filed against some 21 states, seeking to force stations to install the type consumer-friendly pumps they use in Canadian gasoline stations. And there is some hope on the horizon that American consumers may see the benefit of these pumps.
As part of a legal settlement, the cost-saving chain Costco recently agreed to install the new pumps at its gas stations in warm weather states (pending court approval). And now, three of the big oil companies — BP, Shell and ConocoPhillips — are settling too, though the details of the deal are still unclear.
Other gas station chains however, continue to fight the lawsuits.
In the meantime, here are some other gas and money saving tips for filling up at the pump.
-Driver slower, and avoid rapid acceleration. The aerodynamic drag placed on your car at higher speeds (70 mph or higher) affects your mileage negatively…so too does rapid acceleration. Unless you are a woman in labor, the higher costs in potential speeding tickets and mileage loss simply isn’t worth it getting to your destination 1 or 2 minutes sooner (or maybe even not at all).
-Avoid excess idling. An automobile sitting idle burns more gas than restarting the engine and put unnecessary wear on the engine. This doesn’t mean stopping and restarting your engine in the 30 second to 1 minute it takes for the average traffic light to change. This is point addressing sitting in traffic during heavy congestion or that “quick” dash in and out of a store.
-Watch how much weight you carry in your automobile. The use of a roof rack provides additional cargo space, especially for smaller cars. But overloading your car, both inside and out, reduces fuel efficiency (by an estimated 1-2%). It might be a good idea to empty out your trunk of unnecessary clutter held there from the colder months.
-Maintain your automobile. Keeping your tires inflated to the proper pressure will result in longer wear and can improve your gas mileage by about 3.3%. Air pressure should be checked frequently (at least every couple of weeks), especially prior to long trips. And on the note of tire maintenance, driving an automobile that is not in proper alignment produces premature wear on tires, and affects gas mileage negatively. Check your gas caps for damage or loose fitting. A tight-fitting gas cap can help prevent gas—and money evaporation. And replace dirty air filters. Clean air filter can improve your gas mileage by as much as 10%, which is a savings of about 15 cents per gallon
-Plan you trips. Try to ensure that one trip covers all of your errands at one time. Several short stop and go errands can use twice as much fuel than a longer multipurpose trip covering the same distance.
In lieu of smart-pumps which can help us reduce how much we lose in lost fuel mileage in the warm months, we can use smart-sense to help us save money…until the gas stations wise up and decide to help us do so.