NEW YORK (6/1/09)--While credit card rates are under scrutiny in Washington, banks are already looking for other ways to boost their fee income. They are raising fees on checking accounts.
Credit unions might want to monitor this development and market more aggressively their own low rates on checking accounts.
Banks are making it easier for consumers to spend more than they have in their checking accounts, and when consumers do, the banks hit them with steeper punitive fees, according to USA TODAY (May 28).
Also rising: ATM fees, minimum balance requirements for interest checking accounts, and monthly service fees. These fees hit record highs during 2008, according to Bankrate.com. Greg McBride, senior analyst at Bankrate.com, expects these fees to increase even more in 2009.
Several banks have already announced their fee hikes:
Bank of America will raise its monthly fee on some checking accounts and start charging a fee on accounts that remain overdrawn. The reason for the fees: the bank's costs are up and consumers are riskier today. Beginning this month, BofA will raise its monthly account-maintenance fees on its MyAccess checking to $8.95--a $3 increase. It will begin charging a one-time $35 fee if an account remains overdrawn for five business days. The bank has also increased the number of times customers can be hit with overdraft fees per day to 10, or double that of last year.
Wachovia (now Wells Fargo) doubled its fee for transferring funds to cover an overdrawn checking account to $10. It will charge the fee to a credit card rather than taking it from a linked bank account, which means the consumer could pay interest on the fees. A Wachovia spokesman said the fees were increased to make fees the same across multiple accounts.
SunTrust began charging last month a higher fee on basic checking if a customer overdraws multiple times, similar to what banks have done with late fees on credit card accounts. It also raised its overdraft fee on other bank accounts. Even though it charges higher overdraft fees on premier accounts, SunTrust automatically waives one to three overdraft charges a year on the accounts.
Citigroup is charging 3% of the transaction for certain debit purchases and ATM withdrawals made outside the U.S. Last year it charged 2%. Its fund transfers to cover overdrafts are being rounded to the nearest $100 to buffer additional transactions. It also is deducting a $10 transfer fee from checking instead of savings accounts. It also increased its overdraft fee to $34 per incident from $30 in May 2009. It considers the fee in line with industry standards.
Consumer advocacy groups are already monitoring the fees, saying that the banks are perpetrating the downward debt spiral for vulnerable consumers.
courtesy of cuna.org