Congress

Banks Quietly Find a Way to Make Money On Small Accounts. Surprise!

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burning draft cards is easier
burning draft cards is easier

Remember when Congress saved America's poor people from those unfair fees that their banks were charging? Overdraft fees were particularly objectionable, you see, because they were hitting the people who could least afford them—people who didn't have any money in their bank accounts!—and forcing them to subsidize other accounts. 

Then, in an utterly unforeseen turn of events, Bank of America decided to announce some new fees on debit card usage. Everyone flipped out and started trying to light things made of plastic on fire. Bank of America backed off. And now poor people won't get charged for banking services ever again. 

Just kidding.

Bank of America abandoned its $5 a month debit card usage fee in late October amid a firestorm of criticism. Yet, it more quietly raised the cost of its basic MyAccess checking account by more than $3 a month earlier this year. Monthly maintenance fees now run $12 a month, up from $8.95.

Chase and Citigroup, which quickly distanced themselves from the debit card usage fee, ratcheted up the price of their entry-level checking products without the public relations nightmare. This month, Citigroup's basic checking account jumped to $10 a month, up from $8. Chase raised the fee on its standard checking account to $12 a month in February; many of those customers were previously charged nothing at all.

The era of free checking is officially over. Again. 

Meanwhile, poor people increasingly prefer to do their banking at Walmart. (Not coincidentally, Walmart backed the legislation that started this cascade of feetasticness.) Of course, lots of people have been getting their bank on at payday lenders, check cashers, and other not-banks for a while now.

As Peter Suderman notes: "You Can't Call It an Unintended Consequence If You Knew It Was Going to Happen."

NEXT: Road to Nowhere

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  1. If the US government cares so much about individuals and their bank accounts, why not just offer individuals the option of depositing funds directly with the Treasury, with absolutely zero monthly fees?

    What could possibly be safer?

    /sarc

    1. I believe that the US Tax Code already takes a big chunk to “deposit” with the US Treasury, so they’d just have to up the withholding to 100%.

    2. it’s called a ‘bond’

    3. Isn’t this why our progressive friends refer to taxation as “investing”?

    4. It’s called a credit union. Also know as the “PUBLIC OPTION” to free-market for-profit banking.

      Oh it’s so great to see a NON-PROFIT Bank (Credit Unions) offer better services and for LESS than a for profit bank.

      Milton Freedman, eat your heart out.

      1. The difference between a for profit bank and the “non-profit” credit unions is that the owners of the latter (remember that little “share” account you had to open?) choose to take their profits in the form of lower fees.

        1. Twenty-five dollar minimum.

          I see the point, but that can’t buy very much of the joint.

    5. Actually, from 1911 to 1967, the Post Office Department (predecessor to today’s U.S. Postal Service) operated the United States Postal Savings System. It paid 2% interest, and deposits were backed by the full faith and credit of the U.S. government. Unfortunately, it didn’t offer such amenities as the ability to write checks, much less debit cards, access to ATMs, etc.

  2. Some people – apparently a majority of our legislators and voters – just do not get the concept that there’s no such thing as a free lunch.

  3. But isn’t money evil? So, aren’t banks doing customers a favor by taking some of it from them?

    The real problem is lack of competition- banks quit treating customers like customers and instead treated them as if they were doing them a favor. Things like free checking, etc., were steps in the right direction, but the gov’t couldn’t have that.

  4. The fee at Chase is waved if you have Direct Deposit, which I guess further shows that they’re going after the poor.

    And they can all thank Durbin, Dodd, and Frank.

  5. Not coincidentally, Walmart backed the legislation that started this cascade of feetasticness.

    I think that had more to do with lowering the fee for accepting debit cards than any sinister plan to increase their own “banking” numbers.

    1. feetasticness

      Worst Colbert-era baby-talk to date.

  6. I don’t know where you guys do your banking, but my bank pays me 3% APY on up to $25K in my FDIC checking account.

    1. Links or it isn’t real.

      1. O SRY
        https://www.phelpscountybank.com/personal-checking.htm

        Phelps County Bank Ultimate Checking.
        Each month I just need
        10 POS transaction card purchases
        on-line statements
        And Direct Deposit (or other ACH like bill pay)
        In addition to interest I get ALL my ATM fees reimbursed and free Bill Pay.

        No fees, no minimum (Minimum? I keep it full to collect my maximum monthly booty!)

    2. I agree, it takes close to zero effort to find a dozen places to open a checking account with no fees. Off the cuff, if you are paying anything at all for a bank account you are not too bright.

      1. Really? Free with no other conditions at all, like a minimum average balance, or direct deposit?

        1. That’s the usual catch. I have to carry a minimum balance of $2k to get “free” checking (from a Credit Union).

          If I go one penny under $2,000 for one day in the statement period, I get to pay all of the service charges.

          1. I only have to keep a balance of $100 to avoid any fees.

          2. No balance requirement. I just need deposits totaling at least $2k a month.

      2. No fees and no strings attached (direct deposit, minimum balance, maximum debits)? OK, list some, bright guy.

        1. Ally & USAA are 2.

    3. do you work for this said bank? and, will it close down immediately after I depost my money, when I learn that FDIC at this bank means “firey Dominatrix in Cohoots.”?

    4. Shit, mine only pays 2.5% on up to 10k and then 1% on everything above that.

      Since somebody asked for links, transpecosbanks.com.

      1. Either you meant 0.25% on that first $10K or I assume there are some wealthy people with many accounts with $9,999 in each account.

        1. No, he has it right. Follow his link. It’s close to the deal my bank makes.

          My bank pays 3% on up to $25K. I haven’t thought about opening a second account. Once I get above $30k I look for something else to invest in… Like a big screen TV.

  7. I, as a Luddite who does not even “own” a debit card, would rather see those annoying idiots at the grocery store who buy one fucking can of diet soda with a debit card get whacked a dime every time they swipe the card, rather than having the grocery store build the fee into everything I pay for with cash.

    But that’s just me, trying to disguise my crackpottery as economics.

    1. Only a dime?

      Most of the convenience stores here charge between 50 cents and a dollar for debit charges under a certain threshold – usually $5.

      1. If the debit cards have a Visa or MasterCard logo, it is a violation of the terms of service for a merchant to charge a fee for a minimum purchase.

    2. They’re just being rational actors. Why should they give up 5% cash back on groceries because you don’t want to pay for the prices.

      What’s interesting is that for large merchants, cards save them money.

  8. Wells Fargo added a new fee for keeping a checking account open. There are two ways to avoid it: keep a minimum balance (I think it was $1000-1500) or have automatic paycheck deposits set up. I would think this would screw over lower class workers on average more than white collar types on either option.

    1. Does anyone not have direct deposit anymore? The last time I didn’t was when I was working minimum wage in high school, but I would imagine even those type of jobs have it now.

      1. Direct deposit is a pain in the ass unless you are a lazy dumbshit who only has one bank account.

        Because I am forced to use direct deposit, I now have to do more banking transactions per month than when I got an actual pay check

        1. My direct deposit is automatically split into 3 separate accounts.

        2. I can split my direct deposit into 4 accounts. It’s not our fault your company sucks.

          And how can it be more transactions? Was your company in the habit of giving you multiple pay checks?

        3. Does your company give you four paychecks or something? I can split my direct deposit among a number of accounts. If I opted for a check, I would get a single check.

      2. I had direct deposit while working as a stockboy in high school during the early 2000’s.

    2. WF only requires me to keep a $100 in the account.

  9. There’s a bank in my grocery store that charges you no fees as long as you keep $100 in the account. It’s also open on weekends.

  10. Only a dime?

    I was trying to be “reasonable”. I realize the merchant fee is a percentage.

    I suspect a lot of people would look wistfully at a five-dollar flat rate if they got hit up for a dime every time they whipped out their debit card.

    1. I can do a debit card transaction much faster than those who search their change purses and pocket coins for the exact amount, dropping each penny and nickel on the counter as they find it. Urge to kill rising…rising…

      1. I pay cash, mainly to avoid fees but also because I don’t want my bank to track where I buy.

        TBS, I do get annoyed when people don’t get their wallet out before the cashier gives them the total. Seriously, how difficult is it to have the money in your hand by the time the cashier rings in the final item? Anyone with half a brain cell* can figure out roughly what the total is going to be by the time they get in the lineup.

        *Team Blue Obama supporters and Team Red Bachmann supporters can take someone with them to pay.

        1. I don’t want my bank to track where I buy

          Sounds a little paranoid to me. About the only way to preserve your privacy these days is to eschew credit cards and cell phones and GPS navigation aids, go off the power grid, have a cash-only business, “forget” to file your tax return and walk around in public with a Guy Fawkes mask on.

          1. Just because I’m paranoid, doesn’t mean they’re not out to get me.< /Old joke .

            Realistically, you are right. But I prefer to leave as few fingerprints as possible.

      2. My credit union is 12 hours from here. This is to say that I don’t carry cash because in order to do so, I’d have to use the ATM. It’s $3.50 if I want to withdraw money. No thanks. I’ll pay by check card or credit card. Also, if I get mugged, I’ll only be out the fee for a new license as well as the hassel of getting my card numbers cancelled and new ones issued. I’d have to do that in either case. But I’d be out less money.

      3. This. I’ve been saying for a while that there should be one lane in the store for anyone who wants to write a check, and if you’re a check writer that’s the only lane you can use. All of those slow assed check writing motherfuckers should have to wait for each other the eons it takes to complete a check writing transaction.

        Most of the cash people are almost as bad because they don’t start digging for those rumpled little papers until after they get their total. And my favorite is when they’ve dumped out all their hairy change and discover they’re short on their purchase, so they start having the cashier take stuff out of the bags. Yeah, cash payers should have their own exclusive lane too.

      4. People on WIC have been annoying me to no end lately. The grocery store I go to keeps involving some woman in front of me buying about 15 items but doing it in 12 separate transactions.

  11. I prefer to leave as few fingerprints as possible.

    I was at a liquor store buying a case of beer one day (In Indiana, you can only buy cold beer at a liquor store, don’t ask me why) and the girl at the checkout stand asked me if I wanted to sign up for a preferred customer card; I said, “Why on earth would I want somebody to keep track of how much beer I buy?”

    She said, “Wow- I never thought of that.”

    1. Realistically, we’ll be imprisoned for not being tracked AND for the record of the things we buy. But I suspect the latter will be tried first.

  12. People Too Stupid to Understand Layaway Fees:

    http://www.deseretnews.com/art…..cid=rss-32

    Schumer to the rescue !

    1. Why do democrats always fight to limit options for the poor people they claim to champion. This shit is getting ridiculous. “Oh, no! Someone is getting higher interest than my platinum Visa card! To the Chuckmobile!”

      Schumer then leaps towards his Mercedes, man-tits flapping heroically behind his armpits, never once considering that not everyone has a platinum visa card with perfered user rates.

  13. It’s called a credit union. Also know as the “PUBLIC OPTION” to free-market for-profit banking.

    Oh it’s so great to see a NON-PROFIT Bank (Credit Unions) offer better services and for LESS than a for profit bank.

    Milton Freedman, eat your heart out.

    1. “Oh it’s so great to see a NON-PROFIT Bank (Credit Unions) offer better services and for LESS than a for profit bank.”
      Cite missing.
      Sorry, I use both and the for-profit is much more professionally run; prompt service.
      Do you really think that 7% is going to affect the costs to you compared to the efficiency profit forces on an organization?

      1. That’s you and not the thousands of people dumping for-profit banks for Credit Unions.

  14. This is still that old saying the rich get richer and the poor get the shaft.

  15. U.S. Bank Internet Banking is a free Internet banking service that allows customers to access account information and complete various financial transactions. You can Iogin to Internet Banking 24 hours a day, 7 days a week, from any computer with Internet capabilities.

  16. What’s really reprehensible is the way the fee structures hit the poorest people with the highest fees. Oh, and poor people earn lower interest on their little savings accounts than rich people do on their big ones. Then there’s the astronomically high interest a poor person has to pay on a credit card. These banks are functioning as huge poverty-generating machines: take people who already have little money, and make them poorer. Yet, it’s almost impossible to function as an adult in our economy without having a bank account.

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