Posts From November, 2012

New Study Shows Big Banks Equal Bigger Fees 

November 20, 2012 Categories: bank alternatives fees saving

Since Congress largely deregulated consumer checking and savings accounts in the early 80s, the U.S. Public Interest Research Group (US PIRG) has tracked bank deposit account fee changes and documented the banks’ long-term strategy to raise fees, invent new fees and make it harder to avoid fees. A recent study over the last six months, interviewing 250 banks and 116 credit unions in 17 states and the District of Columbia and reviewing bank fees online in these and seven other states resulted in the report “Big Banks, Bigger Fees: A National Survey of Fees and Disclosure Compliance”.

The report examined the following questions:

  • How easy is it for consumers to shop around? Are banks complying with the Truth in Savings Act, which requires disclosure of a schedule of account fees to prospective customers?
  • Can consumers still find free or low-cost checking accounts or has free checking ended?
  • What can the Consumer Financial Protection Bureau (CFPB) and other regulators do to help improve transparency in the financial marketplace?

Key findings included some of the following:

  • Only 48% of bank branches visited provided researchers with fee schedules as required by law on their first request. After two or more requests, eventually a total of 72% complied with the law. More than 1 in 10 (12%) of branches never complied and refused to provide fee information. Another 16% provided only partial information.
  • Researchers found a wide variety of free or low-cost checking options, with 63% of small banks and 60% of credit unions providing totally free checking. Although the biggest banks have recently tightened requirements to obtain totally free checking (available at only 24% of big bank branches), it is still available at more than half of big banks with a regular direct deposit (59%).
  • While more than half of big banks (62%) posted their full fee schedules on the web, versus less than one-third of small banks (29%), finding the fees was often a scavenger hunt. Many banks, especially big banks, placed fees in massive, clunky PDF files. Some banks even hid fee schedule links in footnotes or, worse, in their “site maps,” with no link available from the “compare checking accounts” page or any other pages.

The study also provides a list of key recommendations for both consumers, as well as regulators. Some of the consumer recommendations included the following:

  • Review your bank statements and count your fees. In addition to ATM surcharges, you may be paying your own bank an “off-us” ATM fee that only appears on your statement, whenever you use another owner’s ATM.
  • Examine how many fees you pay. Watch for a la carte fees you can avoid, for example, by only using online check images or statements. Use available text alerts to warn you of low balances that could result in overdrafts. Shop around. Look for better accounts. Bank at a credit union, not at a bank. Credit unions are member-owned, lower-cost alternatives to banks and often offer the same variety of services. It is easier to qualify for membership than most consumers think. Certainly, consider banking at a small bank, not a big bank. Consider moving your money by voting with your feet.

To access the full version of the study please click here. The recommendations might prove helpful to you if you are considering changing your financial institution or are looking for information on the type of fees you are being charged at your current financial institution.

Looking for the Best Credit Card, Credit Unions Might Be the Answer 

November 15, 2012 Categories: bank alternatives credit

Big banks are known for their fees lately and big bank credit cards are no different. Many people have switched to credit unions for their banking needs to avoid big bank fees and many are wondering if they should do the same with their credit cards.

A recent article by Janna Herron published on reviews the good, the bad and the tricky about credit union credit cards, outlining all the things to consider before making the switch.

Like most credit union loan products, the rates are much better than with the big banks. The average APR on a rewards credit card with a credit union was 9.38% as of November 1, 2012 compared with 12.89% for big banks. More interestingly, credit union credit card interest rates are capped at 18%. The National Credit Union Administration (much like the FDIC for banks) mandates the 18% cap for most loans made by federally chartered credit unions, although some short-term small loans have a 28% cap.

Credit union credit cards are also known for lower late payment fees, having a five-day grace period for late payments (compared to one at big banks), and having the same variety of credit card options, such as secured cards, reward cards and platinum cards.

One of the drawbacks to having a credit union credit card are lower limits than with the big banks. Credit unions are risk averse and new accounts will often face lower initial credit limits. Consistent on time payments can often increase the limits more quickly, but it is still a consideration before making the decision to switch.

To read the entire article, click here.

Four Ways to Keep Your Checking Free 

November 05, 2012 Categories: checking fees tips

Yahoo recently published a article regarding ways to keep your checking account free. In an age where fees are on the rise in both amount and frequency, free checking could become a thing of the past.

Credit unions generally offer lower fees and better rates. Many credit unions also offer free checking accounts with no minimum balance required. Those that have fees tied to their checking accounts, usually the fees are minimal and don't put a large dent in already stretched budgets.

To read the full article and to get more tips on how to keep your checking account "free" click here.

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