My wife is manager of a small retail store in Roanoke County. The other day I asked what her customers were talking about.
“Bank fees,” she shot back. “That’s what everyone is talking about. They hate’em.”
The big national banks, such as Bank of America and Wells Fargo and some of the larger regional ones such as SunTrust, have recently announced they will soon end things such as free checking.
There’s different caveats with these money-grabbing schemes. For example, SunTrust won’t charge you $7 monthly for checking if you have direct deposit, or if you keep at least $500 in your checking account.
They’re also levying new monthly fees for debit cards. Those range around $3-5 per month and will apply whether or not you have direct deposit or keep a minimum daily balance. And that charge is just for starters.
Soon they’ll begin hiking those, and blaming bank regulation for it, kind of like the electric company blames its rate hikes on the EPA.
Keep in mind that these are some of the same yoyos whose banking acumen nearly collapsed our economy less than three years ago, which resulted in taxpayers having to bail them out to the tune of nearly $1 trillion.
There’s two things you can do in a situation like this.
The first is, you can accept it, and pay more of your hard-earned dollars to those wizards of finance for the “privilege” of keeping your accounts with them.
The second is, you can switch your accounts to smaller banks or credit unions. For the most part, they still offer no-fee checking and debit cards.
Member One, the largest credit union in the Roanoke region, has seen a recent influx of business.In September alone, new accounts were up 17 percent compared to September 2010, said Mark Hudzik, the credit union’s chief development and public relations officer.
Credit unions have come a long way in recent years, especially in the area of convenience. For example,Member One has online banking, and its customers can make deposits at more than 4,400 branches of affiliated credit unions across the country. Member One also is linked to more than 250,000 no-fee ATMs.
At credit unions, excess revenue is ploughed back into member services — for example, lower interest rate credit cards, car loans and home equity lines. Many credit unions offer financial planning services for customers, too.
The interest rate on a major credit card at Member One is currently 9.9 percent. That’s 3 percentage points lower than my major-bank credit card. And they offer a year-long introductory rate that’s under 6 percent.
Not everybody can join a credit union, however. There are various rules. For example, you have to work for an affiliated business or live in a defined place.
Someone who doesn’t qualify can always switch accounts to a smaller bank, such as Hometown Bank or Valley Bank, both of which are based in Roanoke. And people are taking that route, too.
“We’ve seen a pretty dramatic increase in [new accounts] in the last five to six months, but even more in the last month or two,” said Susan Still, Hometown’s president and CEO.
In September, new accounts at Hometown bank are up 50 percent over September 2010, she said.
Valley Bank pays interest to free-checking customers who use their debit cards more than 12 times per month, CEO Ellis Gutshall told me. Its new accounts in the third quarter of this year are up 27 percent over the second quarter, he said.
“We’ve seen a nice uptick in the last six weeks to two months, not just with consumer accounts but with some substantial commercial accounts, too,” Gutshall said.
I asked Still and Gutshall if they anticipate their banks will follow the bigger banks and begin charging checking account and debit card fees like the big boys.
Both replied “no.”
“We consider that just a part of our account services,” Still said. “We think that’s an important part of banking.”
The long and short of this is that the big banks care about serving businesses. They don’t care about us little guys, except to the extent they can squeeze us for outrageous fees.
But you don’t have to take this lying down. You may not be able to change your electric provider, but you can change banks and save yourself some money in the process.
Vote with your feet, and your accounts.