New Bank Overdraft Fee Laws Are Coming Soon! Will You Be Affected?
On July 21, 2010, President Obama signed new bank regulation laws limiting when and how financial institutions can charge customers for services like overdraft transactions and ATM withdrawals. While designed to protect consumers from exorbitant fees, these laws may have had the opposite effect, as many banks are finding new ways to make money and charge consumers.
In fact, because of these new regulations, many financial experts are predicting the end of free checking unless certain requirements are met. While college accounts are mostly unaffected by these new changes, many “mega” banks including Wells Fargo, Fifth Third Bank and JPMorgan Chase are instituting a monthly fee on previously free checking accounts, unless consumers make a monthly direct deposit more than a certain amount, maintain a minimum balance or make a certain number of purchases each month.
So here’s a preview of the changes coming at 5 major banks and how to avoid paying more under these new bank overdraft fee laws:
Bank of America:
When it begins: Transition to be completed at the end of 2011
Basic Checking
New Fee: $8.95/month
How to Avoid: Opt for an online account which allows you receive statements online and use ATMs. Getting a paper statement or talking to a teller could cost you $8.95.
Enhanced Checking
New Fee: $15.00/month
How to Avoid: Keep a $5,000 total balance in linked checking, saving and investment accounts OR deposit at least $2,000 monthly or used a linked credit card once a month
JPMorgan Chase:
When it began: February 2011
New Fee: $12.00/month
How to Avoid: Maintain a balance of $1,500, make monthly direct deposits of at least $500
Current Customers:
New Fee: $6.00/month
How to Avoid: Make a direct deposit of at least $500/month or make five debit card purchases
Citibank:
When in begins: September 2011
Basic Checking:
New Fee: $8.00/month
How to Avoid: Make five or more monthly transactions including direct deposit, debit card purchases, bill payments, check payments and ATM case withdrawals
Enhanced Checking:
New Fee: $20.00/month
How to Avoid: Maintain a $6,000 monthly balance in linked accounts
Wells Fargo:
When it begins: Began in July 2010
Basic Checking:
New Fee: $5.00/month
How to Avoid: Maintain a minimum balance of $1,500 or make monthly deposits of $250
HSBC:
No change announced
How to Avoid Bank Fees Altogether:
- Do your research and Shop Around– Talk to your bank to find out the impending changes and if you are not happy with the new fees, don’t be afraid to shop around for a new bank. Bankrate.com is a great resource to search and compare bank accounts.
- Downsize your bank –Many smaller community banks and credit unions offer fewer or no fees as well as better interest rates.
- Go Online – Online banks such as Charles Schwab, ING Direct, Flagstar Direct and EverBank offer free checking accounts and more competitive interest rates. However, buyer beware, these banks are not for those who are not internet savvy or prefer to speak to actual people about their banking concerns.