Guest Posting: Find a New Bank!
Mr. Money Mustache is learning that with Blogging Fame comes People Willing To Do Excellent Free Work For You. As it turns out, a couple of dudes who happen to be readers here also have their own blog at www.WeWearKhakis.com. I enjoy the writing style over there, and this post on giving the shaft to ridiculous bank fees definitely gets MMM approval as well!
Is it time to find a new Bank?
When I was 16 years old, I opened my first checking account. I chose my bank the same way I assume most teenagers do – I picked the same bank as my parents. At 16 choosing a bank did not seem like a big deal, I was making minimum wage and all I wanted was a free checking and savings account.
For nearly a decade, I used this same bank despite having mixed feelings about the quality of service. I totaled my car in college and they took advantage of my desperation and ignorance by giving me a loan with an astronomically high interest rate, charged a bundle for paper checks so I never used them, and there were a few ATM here and there. Then last week I received an email – the straw that broke the camel’s back. The bank was notifying me that they were implementing a new $4 monthly service fee for using my debit card. Finally, I had found the motivation I needed to find a new place to “stash my cash”.
For most of us, it is long past time that we started looking for a new bank. Since some new government regulations have cut out a hidden source of debit-card profit for banks and spurred an attempt at regaining it via an onslaught of new fees, now is a better time than ever to really dig in and shop around. Maybe you are smart enough to avoid ATM fees and purchasing checks, but the truth is you don’t have to be!
So what fees are the banks charging us? Turns out, there are quite a few. This is a list of some of the fees my old bank was charging me. As you can see, it isn’t a stretch to consider your bank fees another monthly expense.
Common banking Fees:
Fee: | Description: | $ Amount: |
|---|---|---|
ATM Fees: | For using ATM’s outside the bank branch. | $2 - $4 per transaction |
Account Fees: | Minimum Account Balances: Minimum Transaction Numbers: Account Service Charges: | $8 - $15 monthly |
Debit card usage: | A fee for using your debit card to make purchases. | $4 - $6 monthly |
Checks: | Buying paper checks. | $10 - $30 per book of checks |
Miscellaneous: | Wire transactions: Overdraft fees: | $5 - $35 per incident |
So while the bank is charging you to do business with them, they are also using your cash to finance loans and investments to turn a profit. This should make you especially angry if you were banking with one of the failed banks like Wachovia, who were essentially gambling with their depositor’s cash, requiring a bailout from the FDIC to refund what was lost. These fees are doubly annoying because while the banks are feeing us to death, they’re also using our money to make money! That’s right, if you didn’t know – or never thought about it – banks make money off your deposits. Every wonder why some sleazy banks charge a fee if your balance falls below $1000 or so? It’s their kind way of convincing you to keep a nice chunk of change in your account at all times.
Times are changing for the better though. More and more people are moving away from traditional big branch banks to online offerings that not only offer cheaper services, but also give you superior customer service. I never would have imagined I’d receive better service from a friendly voice over the phone, than an actual person in my local branch bank until I got acquainted with Charles Schwab!
Branch banks are quickly becoming a thing of the past; my town has three orphaned branch banks now, sitting sad and empty. With the cost of rent, employees, utilities, etc. these banks simply cannot compete with online banks.
Still, some people don’t like the idea of doing everything online. If you’re hesitant to switch to a primarily online bank, fear not. Here is how Charles Schwab bank turned me into a believer.
Benefits of banking online with Charles Schwab:
Benefit: | $ Amount: |
|---|---|
Bank from anywhere, anytime | Free |
Paper Checks | Free |
Mobile Deposit (via smart phone) | Free |
ATM Fees | Free (reimburse you for ATM fees incurred by other banks) |
Deposit Checks (by snail mail) | Free (Postage paid deposit envelopes provided) |
Account Fees | Free (non-existent) |
International ATM | Free (with awesome exchange rates) |
Higher yield checking/savings accounts | Free |
Investment Portfolio Advice | Free (they call you periodically to offer advice) |
Actual Customer Service | Free (US based and staffed with professionals) |
Consumer Reports also did a nice job of stacking up many of the top online bank offerings against one another. Here are a few online banks I have either had good experiences with or heard rave reviews from friends and family over:
Changing banks wasn’t all easy. I did have to update all of my automatic bill pay accounts, the direct deposit info at work, and all my information here and there, but in the end, it was worth it.
In the last two months since changing banks I have saved at least $25 (checks, ATM fees, service fees, etc) and as banks continue to add additional fees it looks like the savings will continue to climb. I now receive better customer service, and banking is more convenient than ever. It’s time to dump your sorry fee charging bank and move on to greener pastures!
Have you changed banks recently? Are you hesitant to go completely online? Agree or disagree with me? Let’s hear about it in the comments!
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Mr. Money Mustache is a family man living in the United States who retired from work, relatively wealthy, at about age 30. After several years of retirement, he noticed that his still-working peers were envious of his lifestyle. They were making more money than he ever had, yet they were somehow still broke. So he decided to write this blog to educate the world on how it is done.
These are great options – also check out Perk Street (perkstreet.com). They give you 2% back rewards on every debit purchase.
Hey, MMM. It’s weWEARkhakis.com, not weWEAKkhakis.com.
If you want people to keep doing Excellent Free Work for you, you’re going to have to start getting their links right! :)
Woops! .. I fixed it. Thanks for pointing that out. I guess there are disadvantages to not having an editor, as well as the major advantages. Sorry wewearkhakis.com guys :-)
Not to worry MMM we forgive you! Thanks Rich for the catch!
Done. I gave M&T bank the boot a few years ago. They’re not a mega-bank but they might as well be; their predatory practices are the same. I moved my accounts to a credit union and the bulk of my savings is at ING.
What’s interesting is that I started out with a small local bank and ended up with M&T through no fault of my own. Originally, it was the Savings Bank of Utica, which became SBU Bank, which was purchased by Partner’s Trust which was gobbled up by M&T. M&T had been “my” bank for less than a month before they showed me how they operate. Long story short, I got caught in the middle between a screw-up by Capital One which was exploited by M&T, in which I had to keep scrambling to keep my account in the black while M&T tried to suck it dry via overdraft fees. Eventually, Capital One made me whole again, but I have zero tolerance for the kind of crap business practices of M&T. Their representative lied to my face; I walked out the door and that afternoon opened an account at the credit union.
Moral of the story. Small and local is better, but local banks get gobbled by bigger and bigger fish until you find yourself banking with sharks. Credit unions seem much less vulnerable to this sort of thing, so my recommendation is to move your money – today – to a credit union.
I feel you Kathy. I traditionally tried to stay with local banks and they kept getting goggled up by bigger and bigger banks. I even have my mortgage with a local bank that was superb. It eventually was gobbled up by a larger regional bank who recently decided to start charging $10 a month if my balance fell below $1000.
It was time to move on. My cash is with ING Direct for savings and Charles Schwab for checking and Roth IRA now.
I agree. Schwab is awesome. I live overseas and access all my funds with my Schwab debit card, and the “no ATM fees” thing really saves my bacon! And they really do have great customer service.
Yeah, a friend of mine took a vacation to Europe and really cashed in on using the ATM all over the place. I plan on doing the same thing soon.
USAA is an awesome bank. They have great service/rates and low to no fees on everything except Mortgages. If you are military or affiliated with the military through a family member, check them out.
Why not check out with local credit unions?
Our money talks, and I would rather it said local jobs & small financial institutions than anonymous, online banks.
Yeah, I use both a local credit union AND ING Direct.
The local union is good because of the great service (like going in for a free notarizing service on a document or getting certified/cashier’s checks when buying a car for only a $2 fee). If you ever need help, you call the number, and a person actually working in your branch picks it up and says, “Hello?”.
ING is great because you can automatically move money to and from any of three linked bank accounts at any bank you choose. And it has higher interest rates, no fees, and the Sharebuilder brokerage hooked up as well for stock trades. Plus they have some of the best home mortgage/line of credit rates around. And you can send money to other ING account holders instantaneously without fees.
Combining a credit union with ING or another online bank may be the best of both worlds.
That’s what I have done. I use my local credit union to deposit paper checks, and have my paycheck deposited to ING checking, where most of my bill pay happens. I still have a small amount of non mortgage debt (for much needed home repairs) and that loan is with the credit union. I like the fact that I can instantly transfer little dribs and drabs of cash to the personal loan and see the balance go down instantly, instead of waiting several days for the payment to clear – I’m snow-flaking the debt as well as making conventional payments.
Preach it! I’ve been with my credit union since grad school and loooove it. Their interest rates aren’t great for the savings account, but there are no fees for anything except ATMs and overdraft. As a bonus, they’re part of a credit union ATM network, so I can use almost any credit union’s ATM to get cash or make deposits with no fees.
I use ING for a savings account, and just opened a Schwab checking account to see how I like them. So far I am LOVING the no-ATM-fee thing!
I figure, the bank gets to make money by using my money as capital, so no way am I paying fees. I think the only irritating fee I have anywhere in my financial services is my annual American Express Green membership fee. I like AmEx’s customer service, though, so I don’t mind it much.
We just switched from a horrible mega bank to USAA. Couldn’t be happier. I can deposit checks with my iPhone (although I have to go to a UPS store for checks over $10,000) and I get reimbursed for ATM fees since they don’t have their own ATMs.
I don’t understand how USAA can offer everything for free, essentially, while mega banks charge exorbitant fees. How does USAA make their money? What do the mega banks do with the excess?
Easy! The answer is that they have very few branches which typically saves 25 basis points.
This is a great guest post, thank you! I am in the midst of relocating from Canada to the US for my work and I chose to bank with Ally. They had to ‘manually’ authorize my application due to my shiny new SSN and lack of US credit history but they were really nice about it and the customer service was excellent.
Thanks Annette! I have heard really good things about ING. I hope they take good care of you. Good luck in the U.S.!
I love my ING savings account, even with the interest rates taking a dive over the past few years.
I’m sort of fuzzy on the bank vs. credit union distinction, but I’ve been a member of Affinity Plus (believe they are only in MN) for all my adult life and they are excellent – great customer service, no tricky fees.
I am very open to the idea of switching banks, the one that gobbled up other banks via stagecoach has started a debit card fee in New Mexico and are planning to roll it out to other states. Plus I actually had one banker sign me up for a credit card that I did not authorize. But I have a Car loan there and would need to move it. How do I go about doing that? Especially since I had to have it cosigned in the first place because it was my first car?
When I switched from M&T to a credit union (see previous post), I kept my mortgage with M&T. I was paying extra on it so only had 2 or 3 years to go. It wasn’t worth the trouble trying to move it at that point. But I moved everything else to the CU and ING. You can have your accounts all over town if you want.
Folks might find this article from today’s NY Times interesting: http://www.nytimes.com/2011/10/16/business/online-banking-keeps-customers-on-hook-for-fees.html?pagewanted=2&_r=1&nl=todaysheadlines&emc=tha23
Personally, I think a lot of folks are just too lazy to move their accounts. I haven’t found the online bill pay that daunting to change. Sheesh.
That article is interesting, but talk about some whiny people! Dear god, it’s not the hard to switch online banking and online bill pay info, and those people need to stop blaming their current bank for all the convenience they’ve given them, and how it’s too hard to switch banks WAHHHHH!!! NO IT ISN’T!! I managed to ditch Bank of AmerIca prior to hearing this debit card fee BS, not because I’m psychic or particularly in the know, but because I’d been getting fed up with their shit for years. I had a savings account in ING for quite some time, and I finally made the leap to opening a checking account with them, and closing out my BoA checking. What pushed me over the edge was the thought of 1) getting a checking account that paid interest, 2) no more lag time between savings and checking transfers since they were both in the same place, and 3) they were running a 2-day special around the 4th of July where if you opened an account and charged 3 debit transactions within 30 days they’d give you a $50 bonus, AND if you had two direct deposits over $200 within the first 45 days, you got an extra $76!! FREE MONEY?!?! SIGN ME UP!!! KISS MY ASS BANK OF AMERICA!!!
GREAT post and perfect timing! I just opened a Schwab account because I received two letters from my local bank informing me that, as a courtesy, my accounts were being “upgraded” to “New Checking” and “New Savings” accounts. The only thing “new” about these accounts is their monthly fees!
I was hesitant to change banks because I was not aware of the online options; changing over my bill pay accounts is not a terrible hassle. My local bank charges me for checks, cashiers checks and notary services, and they used to be open 7 days now they’re down to closing early 6 days a week. Never had a great rapport with the branch staff and I always waited at least 10 minutes with my deposits ready to go so I definitely won’t be missing them!
Haven’t banked with a national bank in 30 years. Community banks and credit unions – always. People better wake up to the fact that these multinational banks are out to control the entire flow of the economy and screw as many people as they can to score profits. This was patently clear as early as 1980 and the ensuing S&L failures. See http://moveyourmoneyproject.org/ about the drive to get more Americans to move their money away from multinationals.
Nice, I approve of this movement towards the credit unions. I am not sure how to reconcile this with my love of ING Direct, however. I guess I’ll just have to continue to use both.
Poorplayer, your new Gravatar icon is looking sharp in his autumn wear! ;-)
Thanks, MMM. All the items in that super-fashionable wardrobe are about 5-7 years old, and they still wear great. No need to spend a lot to look sharp, eh? :-)
PS – I am looking into online banking as an option for myself. I have never paid bills online (DW handles bill-paying and she is something of a technophobe), but online banking seems to offer a way to keep my credit union account while transferring money to an online bank for free debit card use and online billpaying. So far Perk St., Ally and ING seem to be the frontrunners. A new trick for this old dog.
I would love to switch to USAA or other good online bank, but the one thing I think I absolutely, positively have to have at a local, physical bank is a safe deposit box. Will local banks let you rent a safe deposit box if you don’t have an account? Are there any good alternatives to a safe deposit box??
Another reason to re-evaluate your banking situation is interest rates. I had a large(ish) sum of money in an online, money market savings account (my emergency savings stash) which was paying 3.75% APY when I enrolled a few years ago. The financial crisis took care of that, but I was still recently able to upgrade from the 0.2% I was getting to 1% at INGdirect. The additional interest income isn’t as significant as the fee savings discussed here unless you have a large balance, but since I have been using this account as my emergency savings it was certainly worthwhile for me. Just watch out for those minimum balance fees during the process of transitioning. I got dinged for $4 at my old bank because I dilly dallied after moving the money but before closing the account.
I have been doing local banking for years with a credit union, and recently added an account with Everbank. I am building up cash there to invest. I like some of their currency and metal accounts, although I have not invested into one yet. I may take a look at Schwab as well, sounds good.
Ever heard of BankSimple?
https://www.banksimple.com/
Curious what you think of this concept, the customer service and ease-of-use seems to be the focus, but I’m not sure what that means about the actual back-end bank products.
Am I the only one who noticed the yellow glowing diamond mustache as the thumbnail of this article? Hahaha, nice one MMM!
I recently switched to USAA. Contrary to popular belief, anyone can use them for online banking. You don’t not have to be in or affiliated with the military.
The only things restricted to the military are their insurance products and the ability to deposit checks via cell phone camera. The latter is a negative, but I just use my local credit union if I ever need to deposit checks.
FYI – my bank just sent me an email apologizing for the fees and saying they are refunding everyone and will no longer be charging fees. Apparently there was a ton of backlash. It looks like all the chatter on the internet and complaint letters paid off! I need to write a follow up post on the subject.
Our efforts paid of MMM!
I am also a proselytizer of Charles Schwab banking. They are the only financial institution for which I’ve ever had overwhelmingly positive feelings. I have no idea how they make money off of me, but I could not be happier with them.
No fees, they refund me when I use other ATMs (to the tune of about $30/month based on my habits), they have top-notch phone support, and they even added a way to deposit a check by taking a picture of it via their iPhone app. The interest rate is so tiny that it’s virtually meaningless, but hey, it’s a checking account. The only way I could be happier with them is if they paid me. If you don’t have this type of account and don’t NEED a local branch, get one (whether through Schwab, ING, etc.). Now!
Hmmmmm. With the impending finalization of the Capital One buyout, I’m considering jumping ship from ING. I don’t really want my bank to be old shouting guy who always wants to know WHAT’S IN YOUR WALLET?!
TomTX – This is my recent concern as well… what’s going to happen to my wonderful relationship with ING after they become CapitalOne ? What other online banks are you looking into?
They’ve already switched over for the most part, and no policies are expected to change at all. Since I’ve got everything set up the way I like it with ING/Capital One, I plan to stick around. One false move on their part, however, and I’ll move elsewhere. Been meaning to read up on Ally bank.