In 2016, the ten biggest banks in America earned 7.5 billion dollars in overdraft fees. For one bank, the money they earned in overdraft fees was 11% of their total profits for the year. Overdrafts aren’t the only way banks nickle and dime their customers, and you don’t have to put up with it.
Despite the many scandals that have taken place over the past few years, the largest banking institutions in the country still act as if they’re entitled to our money.
Wells Fargo just last year had a number of concerning lawsuits and violations, such as fraudulent accounts, false charges, executive abuse, but they haven’t made any changes to their fees or customer service. You’d think they’d be wanting to lower their fees to entice more people to come back to their bank, but they really don’t seem to care.
How much do you pay your bank every year in fees? Overdraft fees, operating fees, ATM fees, the list goes on and on.
Bad Banking? You're Not Alone!
I had one client come to me because he was concerned about how much he was paying in fees to his bank every year.
He was an entrepreneur with a small business bank account and worked hard to keep money in his account every month only to have a large percentage of it disappear.
The biggest chunk of the deductions seemed to be coming from something called an “account analysis fee.” We called his bank to see what that fee was for and they basically avoided the question but said they were allowed to take the money out before of some wording in the fine print of his contract. We also learned that if he switched to another type of business bank account in the same institution, he could avoid that fee and other fees altogether. But how would he know that on his own?
Another client came in confused about why he was getting random fees taken out of his account every month. After looking at his contract, it became apparent that he only could have a certain number of transactions every month. After that, he’d be charged a fee for each transaction. What the point of a checking account with limited use?
These are just two examples of ridiculous fees every day people get from their bank. Despite the fact that they chose to give their money to these institutions, customers are often treated as if the bank is entitled to these meaningless fees.
So what can you do to avoid them?
Don't Settle For Second Best
Most people assume that these fees and the cycle of poor customer service are just the status quo for banking. They assume that this is just the way banking works. It doesn’t matter if they switched to a new institution, it would be more of the same. Additionally, it takes a lot of money to move your money around.
People think it wouldn’t be worth switching banks in the long run, but that’s not true!
I’ve found two great options for anyone fed up with their bank’s nickel and dime fee schedule.
- Ally Online Bank - Ally is a completely online institution, meaning there are no brick and mortar locations available.
They use this strategy to save their customers tons of money. There are no ATM fees, no operating fees, no minimum balances and best of all, they have a reasonable overdraft fee policy. Instead of charging a per transaction or percentage fee for overdrafts, you pay only $25 per day. They’re an open and honest banking solution with great customer service and no price gouging.
2. A Local Bank - If you still prefer a brick and mortar bank that you can walk into when need be, consider a local bank instead of a national institution.
Recently, I did a podcast with the owner of a local Atlanta bank, Vinings. In talking to him, he told me about the low-cost, personal banking policy they had. They have low, reasonable fees and take their customer service seriously.
What I found most amazing about Vinings Bank was their person-by-persona loan decisions. Most banks will use a computer to make loan decisions, which can leave lots of people disappointed, but they will personally review your financial situation. Even better, if you decide to switch to Vining's from your current institution, they’ll do all the work for you to get you moved over to your new account.
Your Bank Should Care About Your Money Like You Do
No matter what option you go with, make sure you don’t accept the status quo.
You can find a bank that values you and your money as much as you do. We can even help! We’ll walk you through your banking and investment decisions to help you find companies that will work for you instead of against you. Don’t be okay with giving money to people who don’t care about you.