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Banks Quietly Ramping Up Costs to Consumers
NY Times ^ | November 13th 2011 | Eric Dash

Posted on 11/14/2011 4:00:12 AM PST by Cardhu

Even as Bank of America and other major lenders back away from charging customers to use their debit cards, many banks have been quietly imposing other new fees.

Need to replace a lost debit card? Bank of America now charges $5 — or $20 for rush delivery.

Deposit money with a mobile phone? At U.S. Bancorp, it is now 50 cents a check.

Want cash wired to your account? Starting in December, that will cost $15 for each incoming domestic payment at TD Bank. Facing a reaction from an angry public and heightened scrutiny from regulators, banks are turning to all sorts of fees that fly under the radar. Everything, it seems, has a price.

“Banks tried the in-your-face fee with debit cards, and consumers said enough,” said Alex Matjanec, a co-founder of MyBankTracker.com. “What most people don’t realize is that they have been adding new charges or taking fees that have always existed and increased them, or are making them harder to avoid.”

Banks can still earn a profit on most checking accounts. But they are under intense pressure to make up an estimated $12 billion a year of income that vanished with the passage of rules curbing lucrative overdraft charges and lowering debit card swipe fees. In addition, with lending at anemic levels and interest rates close to zero, banks are struggling to find attractive places to lend or invest all the deposits they hold. That poses another $8 billion drag.

Put another way, banks would need to recoup, on average, between $15 and $20 a month from each depositor just to earn what they did in the past, according to an analysis of the interest rate and regulatory changes on checking accounts by Oliver Wyman, a financial consulting firm.

(Excerpt) Read more at nytimes.com ...


TOPICS: Extended News; Miscellaneous; News/Current Events
KEYWORDS: all4dnc; all4dodd; all4frank; antibank; anticapitalist; banking; banks; dncrico; dodd; doddfrank; durbin; economy; elizabethwarren; fees; finance; government; warren
"Today, according to Oliver Wyman, banks are expected to take in, on average, between $85 and $115 in fees a year per account — making it especially hard to turn a profit on customers with low balances."
1 posted on 11/14/2011 4:00:13 AM PST by Cardhu
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To: Cardhu

$85 and $115


Fair enough, they should see what I charge for my services.


2 posted on 11/14/2011 4:05:57 AM PST by Dusty Road
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To: Cardhu

What’s the difference between a wired deposit and a direct deposit? Everybody wants you to go to paperless deposits and now you get hit with extra fees anyway.


3 posted on 11/14/2011 4:08:55 AM PST by Truth29
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To: Cardhu

I hate paying fees as much as anyone else does, but the banks are really in the difficult position of trying to run themselves as a business even while their customers think of them as a public utility where their services should be just about free.


4 posted on 11/14/2011 4:09:15 AM PST by Alberta's Child ("If you touch my junk, I'm gonna have you arrested.")
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To: Alberta's Child

Yup!


5 posted on 11/14/2011 4:12:12 AM PST by Dusty Road
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To: Alberta's Child
All of this started because liberal lawmakers made banks stop charging the worthless losers high fees for not paying their bills on time and writing bad checks.

Like everything else they do, now the responsible people have to pay for the losers on society.

6 posted on 11/14/2011 4:20:54 AM PST by Beagle8U (Free Republic -- One stop shopping ....... It's the Conservative Super WalMart for news .)
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To: Alberta's Child

If you dont want the fees then dont do business with banks.


7 posted on 11/14/2011 4:24:41 AM PST by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: Cardhu

...government to follow suit.


8 posted on 11/14/2011 4:25:45 AM PST by Ghost of Philip Marlowe (Prepare for survival. (Karl Denninger has jumped the shark. Do not visit his blog.))
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To: Truth29

The secret is to find a different bank. Unless you live in the sewer of a very large city it should not be that hard.


9 posted on 11/14/2011 4:30:42 AM PST by bert (K.E. N.P. +12 ..... Crucifixion is coming)
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To: Cardhu
Deposit money with a mobile phone?

How do you do that? I have an online account with my C.U. but can't find a port on my computer to stuff cash in. Transfer from account to account, yes.

10 posted on 11/14/2011 4:33:13 AM PST by Graybeard58 (Of course Obama loves his country but Herman Cain loves mine.)
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To: Cardhu

I’ve noticed changes in my favorite bank, who used to go out of their way to avoid charging you. They USED to cash the smallest checks first, to avoid the bounce-after-bounce death, but not anymore.


11 posted on 11/14/2011 4:35:03 AM PST by Lazamataz (Eat your neighbors, because no Federal help is coming.)
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To: driftdiver
There ya go, it's just that simple. All you have to do is stash your cash under a mattress then when bills are due you just go by and pay them in cash or you can fill a letter full of cash and send it to them. I much rather prefer the security and convenience of my local bank.
12 posted on 11/14/2011 4:36:47 AM PST by Dusty Road
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To: Truth29

I get charged if I do a paper deposit. More than six a month and it is a $5 fee/


13 posted on 11/14/2011 4:37:35 AM PST by redgolum ("God is dead" -- Nietzsche. "Nietzsche is dead" -- God.)
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To: Dusty Road

ever heard of a credit union. DOH!


14 posted on 11/14/2011 4:38:18 AM PST by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: Dusty Road

Jumping in, there is another alternative to a bank.

If you have an account with one of the brokerage firms, they will provide a debit card free and pay the ATM fees for withdrawals from anywhere. Deposits are made direct electronically. The costs to you are zero. They will also provide paper checks.

The thought that must be remembered is that money is not paper. Money is electrons on an electronic ledger. If you learn to move electrons around, you do not need paper.


15 posted on 11/14/2011 4:44:25 AM PST by bert (K.E. N.P. +12 ..... Crucifixion is coming)
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To: Truth29

I was thinking the same thing.

Time to go talk to the banker...


16 posted on 11/14/2011 4:45:15 AM PST by EBH (God Humbles Nations, Leaders, and Peoples before He uses them for His Purpose)
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To: bert
The thought that must be remembered is that money is not paper. Money is electrons on an electronic ledger. If you learn to move electrons around, you do not need paper.

Do those have to be your electrons, or can you move anyone's electrons around, as you wish?
17 posted on 11/14/2011 4:46:06 AM PST by Oceander (If Romney is the GOP nominee, then Obama wins in 2012, either directly or by proxy)
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To: driftdiver

My bank has just told me that it is going to charge me fees to send me a monthly statement with pictures of my checks. In other words if I want a paper trail, I have to pay for it. Is this common?

I am going to call around.


18 posted on 11/14/2011 4:48:02 AM PST by Chickensoup (In the 20th century 200 million people were killed by their own governments.)
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To: Cardhu

By Daniel Willis
The Times
© Copyright 2011, Bay Area News Group

Posted: 11/05/2011 12:01:00 AM PDT
Updated: 11/05/2011 06:01:54 PM PDT

http://www.contracostatimes.com/ci_19272822?IADID=Search-www.contracostatimes.com-www.contracostatimes.com

On Saturday, I closed all my accounts at Chase Bank. I didn’t do this because I’m a protester or a self-styled revolutionary. I didn’t do it for political reasons. I transferred my money out of Chase because it’s my duty as a capitalist.

Capitalism, at its core, is economic democracy. The analogy isn’t perfect, of course — it’s certainly not one person, one vote — but the basic concept is true. Every time you spend any money, you’re casting a vote for that business to survive and grow instead of competing businesses.

In most cases, this serves as incentive for the business you don’t vote for to improve their product. If two restaurants are next door to each other, for example, you’re going to eat at the one with the best food. The other will see the empty tables and improve its menu. The first restaurant, in turn, has to improve to maintain its lead. In the end, you, as a connoisseur of fine cuisine, win.

Banks don’t have a tangible product. Interest rates are negligible for checking and savings accounts if they exist at all, so with a couple minor exceptions such as smartphone apps and ATMs that accept checks, they’re a generic service. That means the distinguishing features of any given bank are its fees. Chase has, over the course of this year, gone from not charging me a fee for my checking account to charging $5 per month and, currently, $10 per month. My savings account incurs a fee as well.

By keeping these accounts open, I’m implicitly giving Chase my permission to invest and earn a return off my savings. This means I’m paying Chase about $200 per year for the privilege of letting them earn money off my money. I’ve come to realize that this is my fault. By paying these fees while other banks don’t charge them, I’ve been endorsing them, removing the bank’s incentive to improve its value. If you’re also paying these essentially voluntary fees to Chase, Bank of America, Wells Fargo or a long list of others, it’s your fault as well. By paying them, we’re telling banks that they don’t have to bother to do better. We’re casting our votes in favor of paying hundreds of dollars per year unnecessarily.

I’m done letting one of the core principles of capitalism wither away because of my inaction. I’m moving my money and casting my vote for any of the numerous local banks and credit unions that don’t charge monthly fees and, in some cases, even refund other banks’ ATM fees. The minor inconvenience of opening and closing accounts is a small price to pay to help make sure that the system works as intended.

Since I was closing my accounts anyway, I did it on Bank Transfer Day and it felt good. Really good. If we all transfer our money into small banks and credit unions in the next few weeks, the collective action will be harder to write off as due to anything but customer satisfaction. It will be our Economic Election of 2011.

The system has a mechanism to improve itself. Our economy is designed to constantly provide us with lower costs and better service. It’s well past time to put that mechanism into action. Go to www.moveyourmoneyproject.org to find a local bank or credit union and do your part for capitalism.

Daniel Willis is a database producer at the Bay Area News Group.


19 posted on 11/14/2011 4:50:24 AM PST by EBH (God Humbles Nations, Leaders, and Peoples before He uses them for His Purpose)
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To: Chickensoup

Yes all banks are increasing fees it seems. Mine didnt used to charge for those things but its starting to add them fee.


20 posted on 11/14/2011 4:51:02 AM PST by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: driftdiver

At such low interest rates it is cheaper for people to keep their money under their mattresses.

According to the article, the average interest rate is .074% and the average yearly fee is $100. This means on a balance of $10,000 you will make $74 in interest but pay $100 in fees and end up losing $26.

So you save $26 a year keeping the money under your mattress rather than investing it in a bank.


21 posted on 11/14/2011 4:52:24 AM PST by grasshopper2
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To: Cardhu

I got a solicitation from my C.U. to change my checking account to an interest bearing one. The deal was that I’d be required to keep a minimum balance of $2500 in it, I do that anyway but I didn’t want to be required to do it.

Nowhere in the letter they sent me did they mention just what amount of interest they would pay. Since I already know that they pay 0.17% on savings accounts, I’m guessing that checking would pay that amount or less. I won’t even bother to change my account for that paltry amount. The checks I use are already free.


22 posted on 11/14/2011 4:53:33 AM PST by Graybeard58 (Of course Obama loves his country but Herman Cain loves mine.)
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To: Graybeard58
"How do you do that? I have an online account with my C.U. but can't find a port on my computer to stuff cash in. Transfer from account to account, yes."

It's for checks - a mobile phone app. You take a picture of the front and back of the check and transmit the image to your bank. Done. You never send in the physical check.

23 posted on 11/14/2011 4:55:45 AM PST by Truth29
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To: EBH

Nice article, but misses the point. Banks don’t like charging individual customers direct maintenance fees because it gets peoples’ undies in a twist, like this guy. However, the supreme law of economics is TINSTAAFL - there is no such thing as a free lunch - and banks are as much subject to it as anyone else. Banks are not charities and must earn at least the costs of the services they provide through some means, and since the oh-so-concerned liberals in government are constantly, and futilely, trying to create what cannot exist - Nature abhors a free lunch almost as much as it abhors a vacuum - the need to cover your costs has to be satisfied one way or another, and charging individual customers maintenance fees for their accounts is the latest cranny from which this irrepressible urge has now popped.


24 posted on 11/14/2011 4:56:40 AM PST by Oceander (TINSTAAFL - Mother Nature Abhors a Free Lunch almost as much as She Abhors a Vacuum)
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To: Beagle8U
All of this started because liberal lawmakers made banks stop charging the worthless losers high fees for not paying their bills on time and writing bad checks.

Name names. Here, I'll help. Dodd and his queer buddy Frank.

25 posted on 11/14/2011 4:57:11 AM PST by Graybeard58 (Of course Obama loves his country but Herman Cain loves mine.)
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To: grasshopper2

I find the small local banks to be a lot easier to work with. The regionals are next.

The large national or global banks are just plain evil.


26 posted on 11/14/2011 4:58:48 AM PST by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: driftdiver
If you dont want the fees then dont do business with banks.

In more than 40 years of doing business with my Credit Union I don't remember ever paying any fees. I used to have to pay a small amount for new checks but they don't even charge for that anymore.

27 posted on 11/14/2011 5:00:54 AM PST by Graybeard58 (Of course Obama loves his country but Herman Cain loves mine.)
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To: EBH

I agree with you EBH. I live in Spain and keep an account in a small bank in Kansas - it only has two branches but it is the most efficient bank I have every done business with.

It seems that the larger banks just want to nickle and dime their customers to death.


28 posted on 11/14/2011 5:08:27 AM PST by Cardhu
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To: Graybeard58

believe it or not. You take a photo of the check with your smart phone and they process it.


29 posted on 11/14/2011 5:16:54 AM PST by cableguymn
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To: Cardhu

Community banks played an important role in small towns. Intermediary services without international hedge fund risk. The “little guy” is now expected to make up bank losses on bad bond purchases.


30 posted on 11/14/2011 5:33:50 AM PST by April Lexington (Study the Constitution so you know what they are taking away!)
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To: Cardhu

bfl


31 posted on 11/14/2011 5:55:17 AM PST by spankalib (The Marx-in-the-Parks crowd is a basement skunkworks operation of the AFL-CIO)
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To: Alberta's Child

We were raised with the idea that if we put our money in the bank, we would gain interest because they were using our money to make money via loans. All the “no interest accounts” should have no “fees”.


32 posted on 11/14/2011 6:02:16 AM PST by Sacajaweau
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To: Oceander
Banks are not charities and must earn at least the costs of the services they provide through some means...

True, but many banks seem to have changed their business model quite a bit over the years. Back in the early 1980s, banks were able to attain profitable operations while paying deposit accounts interest rates around 4% and loaning unsecured money at around 12% to 18%, with minimal fees. Now, banks are paying depositors less than 1% and loaning unsecured money at 16% to 29% and claiming they can't make money without a lot of fees - even though they are processing more transactions electronically which reduces their costs. So for some reason, even though the spread that the banks have to work with has doubled, banks today say they are short on revenue.

Maybe their real problem is bad investments, or excessive overhead, or excessive compensation of their employees and executives. Or some other structural problem like excessive government intervention in the financial markets. Or all of the above.

33 posted on 11/14/2011 6:25:34 AM PST by freeandfreezing
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To: Oceander

Generally you can Move only to your ledger entries

Electrons merely exist momenterily as entries are
Made

The customers of mc global had their entries comingled


34 posted on 11/14/2011 10:30:49 AM PST by bert (K.E. N.P. +12 ..... Crucifixion is coming)
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To: Beagle8U
Actually, there's more to it than that. For one thing, the Federal regulations that drove much of this involve debit card fees . . . and I suspect that people with debit cards are more likely to be responsible consumers.

Secondly, banks are also facing a combination of low interest rates and a housing market in the dumps, which means they can't generate much mortgage revenue and don't have as many mortgage origination fees as they used to.

35 posted on 11/14/2011 7:21:10 PM PST by Alberta's Child ("If you touch my junk, I'm gonna have you arrested.")
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To: driftdiver

Exactly. Get used to more fees, and higher fees . . . because these banks are in business.


36 posted on 11/14/2011 7:22:08 PM PST by Alberta's Child ("If you touch my junk, I'm gonna have you arrested.")
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To: Graybeard58; Oceander; Lazamataz; bert; Beagle8U; Dusty Road; Cardhu; Alberta's Child; All
All of this started because liberal lawmakers made banks stop charging the worthless losers high fees for not paying their bills on time and writing bad checks.

Name names. Here, I'll help. Dodd and his queer buddy Frank.

And don't forget Sen. Dick Durbin and Elizabeth Warren who was pushing for Consumer Financial Protection Bureau and is running for Senate seat in MA.

This is exactly what happens when government (liberals) want to make banks into a government-regulated "utility" instead of free market, competing on price and quality of services. Sad to see so many on FR joining the Democrats and "occupiers" in blaming "big banks" and the financial services industry when the problem is and has been all along with the government regulation...

FTA: Banks Are Quietly Ramping Up Costs to Consumers - CNBC / NYT, 2011 November 14

For those who think the "answer" is "friendly" non-profit (i.e., tax-free) credit unions, part of the reason is that CUs are tax-advantaged compared with small or big banks. But with larger deposit base, CUs will need to increase revenues, too... so expect similar gimmicks from them, without as many services or broad areas of coverage that many people need.

From Credit Unions Poach Clients - WSJ, by Suzanne Kapner, 2011 November 7

As usual, with government, be careful what you ask for, you just might get it. Anyone wants more "consumer protection" or "consumer-friendly" regulation from the likes of Dodd, Frank, Durbin and Warren?

37 posted on 11/14/2011 7:53:53 PM PST by CutePuppy (If you don't ask the right questions you may not get the right answers)
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To: CutePuppy

Great post, it really underscores how the media controls public perception.


38 posted on 11/14/2011 8:07:43 PM PST by montyspython (This thread needs more cowbell)
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To: Alberta's Child
No, the debit card fee was a reaction to government restrictions on charging to much to the losers writing bad checks etc.

They are trying to make up for the losses from those regs.

39 posted on 11/15/2011 2:58:33 AM PST by Beagle8U (Free Republic -- One stop shopping ....... It's the Conservative Super WalMart for news .)
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To: Cardhu

“Banks Quietly Ramping Up Costs to Consumers,”

False:

Banks Attempting to charge those LOANING THEM money.


40 posted on 11/15/2011 3:23:33 AM PST by Varsity Flight
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To: Alberta's Child
the banks are holding billions in people's savings accounts and paying less than 1% in interest, all the while the big banks anyway borrowing from Uncle Sam for practically zero....and the of course mortages are minimumlly at 3.25%...

I don't feel sorry for the banks...I feel bad for we consumers and savers who are seeing our money dwindle...

41 posted on 11/15/2011 11:58:28 PM PST by cherry
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