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Checking Account Fees Are Still Too High

It cannot be understated that checking accounts is a very important financial management tool for households. In fact, it must be noted that 9 out of 10 adults in America own a checking account. Still, there’s the perception that the price of maintaining a checking bank account is too high. And for something that a lot of people patronize, that sure sounds like a huge rip-off.

Even the Pew Charitable Trusts, one of the more trusted public policy research groups around, concludes that checking account fees are still too high, and there should be a move towards transparency for both banks and credit unions.

Trouble with checking account fees is one the leading reasons why people have been declined on their new checking account applications. While you can rely on second chance checking accounts, it is important to be on a lookout for these fees being added on your account. If you are not careful and end up with more fees than you can pay, you risk getting your account closed, or having your progress to getting on a regular checking account program blocked.



In an original study released in April 2011, Pew analyzed over 250 kinds of checking accounts listed online by the 10 largest banks across the nation. Together, these 10 banks hold almost 60% of all funds deposited in the US. Finding on update to the study was released in June 2012. The updated study included account practices of 12 largest banks and 12 largest credit unions.

For the meanwhile, maybe we cannot do anything about the excessive cost of bank account fees. But based on the Pew study, there are some things we should take note of to avoid paying too much while owning a check account.

1. It is a fact that banks are not discussing their fees and policies in a uniform and concise manner. We’ll never know if that is by design, but it sure deters people from reading what’s inscribed there. There’s a call to make terms and conditions easier to read and understand. The median length of account disclosures have significantly been shortened from 111 pages to 69 pages. But at 69 pages, that is still too long.

Until banks can produce more user-friendly terms and conditions sheets, as consumers, let's try to at least browse through the terms in effect when we open a new account. We may want read anything related to fees as well, to understand what we may on the hook for sometimes.

2. Credit institutions don’t have any clear guidelines and information regarding overdraft charges and options. And while there are options that can be availed for much less, consumers are usually not aware of them. Overdraft fees have cost consumers an estimated $29 billion dollars in 2011. As consumers, we do deserve to know about a credit institution’s overdraft charges and options. According to the Pew study, the median overdraft fee was $35 for large banks.

As consumers, let's take an active role in finding out what the fees assessed will be in case of an overdraft. We sould also be vigilant about services like automated transfers from savings account to checking accounts to prevent the checking account from getting overdrawn.

3. All 12 banks researched in the PEW study were reported to chalk up on overdraft fees by reordering withdrawals from the highest to the lowest amount, or at least having the right to do so without notice. This finding tells us that once your account gets into an overdrawn situation, it can snowball quickly into a large fee.

The only way to address this is to be ever vigilant about how much money we have in our checking accounts and never spend more than what's in there. Remember, you can end up paying a lot more on the bank account fees due to an overdraft than the amount that you are overdrawn on eg. overdrawing your account by $5 to pay for lunch can result in a $35 overdraft fee tagged on.

As an alternative to a conventional checking account, consider a prepaid Visa card account with no ChexSystems requirements. It works just like a checking account, allowing for direct deposit of paychecks and online billpay (one-time or recurring payments). You can deposit cash into the account from 135,000 retail locations nationwide. In addition, the card can be used anywhere Visa is accepted. Click to learn more: The Perfect Alternative to a Checking Account!


The perfect alternative to a checking account