Sunday, October 9, 2011

Bankers' Math -- 0+0=5

Banks are scrambling to find new ways to charge for their services now that new regulations restrict some of their more lucrative practices, like automatically signing up people for high cost overdraft protection for debit cards, or charging merchants $.40 per debit card transaction.  I've already written about higher ATM fees, which have risen in some cases to $4 or $5.  Other increases include charges for returned items like checks or bounced electronic payments -- charges which are in principle justified, but not at the levels now being levied (for example, $30 for a declined ACH electronic transfer which requires little human intervention).   And one of my favorites is a $1 to $2 fee just to find out your balance via an ATM.

The fee hikes and increasing number of fees are bad enough, but banks are apparently reluctant to reveal publicly what their fees are so that consumers can make comparisons.  According to a research study presented in Consumer Reports, when 400 banks across the country were contacted "...fewer than half of the bank branches complied easily with a request for fee schedules. Under the Truth in Savings Act, banks are required to provide this information. However, only after two or more requests did 55 percent of branches provide fee schedules."

Of  course, providing information in a clear and informative way may have negative results for the banks.  For example, a recent study also by Consumer Reports found that only 22 percent of bank customers have opted-in for debit card overdraft protection now that new Federal regulations require banks to get permission before signing them up.

My own local bank, First Hawaiian, has recently shown that the Aloha Spirit is fine as long as it doesn't interfere with profits.

In the envelope with my monthly statement the other day was a little slip of paper detailing changes in account fees.  There were the usual hikes like those mentioned above plus a couple of particularly puzzling ones.  The first was an "Inactive Account Fee" of $10 for each month the account is considered inactive.  Does it really cost the bank $10 per month to keep an account in its electronic database when there are no transactions into or out of it?   Damn, the price of electrons must be skyrocketing!

Another one is a particularly good example of Bankers' Math.  First Hawaiian doesn't charge a fee for receiving a paper statement each month (yet).  If you elect to go Green and have only electronic statements sent to you that also is free.  However, if you choose to have both a paper and an electronic statement the fee is $5 per month, despite the fact that the electronic image used to print and mail a paper statement is likely the same one available for viewing online.

In other words, according to Bankers' Math, 0 + 0 = 5.

Related Blogs:

Bankers' Math -- Parts Un, Deux, Trois, Quatre, Cinq

1 comment:

SimoneStan said...

I am a firm believer in Credit Unions. Most credit unions have all the services associated with commercial banks: savings and checking accounts, credit and debit cards (with lower interest and fees), and the larger ones can do auto loans and mortgages. If you are not a business then a credit union could be the answer to those high banking fees. I belong to two - the massive Boeing Employees Credit Union (no I don't work for Boeing), and the tiny Miami University Community Credit Union.