FORT KNOX, Ky. — The Federal Trade Commission is observing March 5-11 as National Consumer Protection Week.
“National Consumer Protection Week is an opportunity to arm ourselves with information to protect and safeguard our financial well-being,” according to one website. The key goal of National Consumer Protection Week is to help consumers understand their rights and provide customers with knowledge and tools to prevent scams and fraud.
A financial topic often ignored addresses fees.
Financial institutions provide safe solutions for managing money and growing savings. But what about the fees they impose for account setup, maintenance and minor transactions like ATM fees? Fees can be pricey and often are designed to catch you off guard. If you are not careful, the costs can add up over time.
Most people have probably experienced the pain of a bank fee or two at one point in their life. They may have been confused as to why a fee was assessed.
Seldom do we inquire about why specific fees are charged; we just accept them as being part of what we are required to pay. But ask yourself, “Am I overpaying for the financial services I receive?” and, “Are these fees required?”
What fees should we pay attention to?
There are numerous fees to consider when working with a financial organization. They include checking account fees, minimum required balance fees, ATM fees, NSF and overdraft fees, grace period fees, credit card fees, paper statement fees, cashier check fees, wire transfer fees, inactivity fees, asset management fees, and retainer fees. Do your homework. Know what they are and why they’re there.
And there is more! Let’s talk about how the fees are charged.
Fees can be charged numerous ways — by the hour, by a fixed or flat fee, commission based, on-going or a one-time basis. Yet others are charged according to bank policies whether in person or over the phone. In case you didn’t know, fees make up a big portion of bank revenue, so it is important to READ THE FINE PRINT.
Financial institutions must be transparent about their fees.
A disclosure is made available to reveal “fee-charging practices.” This is designed by law to help consumers avoid the shock of service fees, costs for transactions and any penalties.
Additionally, if a depository institution is going to make changes in terms, they are required to communicate the changes IN WRITING within 30 calendar days per the SEC 1030.4 (b). Advance notice refers to “a term required to be disclosed in connection with the account.” So, if changes refer to account terms, payment arrangements, annual percentage rates, service charges, stop payment fees and or any other significant changes, or the account terms, the institutions are required to provide advance notice.
Research reveals financial institutions are reliant on the fees they assess. But take note, changes are in the making. Verification reveals that there have been notable trends in banks announcing changes to their programs and working to ensure fee reductions are implemented. Per the Consumer Financial Protection Board, some of those changes include:
- Eliminating NSF fees when transactions bounce
- Reducing the size of the over-draft fee
- Reducing the number of overdraft/NSF the banks can charge each day
- Providing a grace period allowing time to bring your account positive BEFORE charging an overdraft fee
- Eliminating “extended and sustained” overdraft fees when the account is NOT brought back to a positive after a certain period
It is a smart practice to always compare the best prices among financial institutions that are competing for your business.
To compare the Top 20 bank policies, refer this chart. The blue shading on the chart reflects the latest reported changes that are either already in effect or expected to go into effect soon.
How can one avoid paying fees?
Well, there are many strategies to dodge pricey fees. It’s important to pay attention so you don’t pay more than you must:
- Avoid overdraft fees. Overdraft protection is offered by financial institutions to prevent being penalized when balances are too low. Make sure you set up low balance alerts on your phone or a banking app that prompts you when you are getting near zero.
- Analyze it before you commit. When shopping for a bank account, consider whether you can meet the requirements the financial institution advertises before committing to that entity.
- Monthly maintenance fees. These are avoidable. You can carry a larger balance, or automatically deposit your paycheck to ensure you maintain a specific balance.
- Bank statement costs. Elect to have your bank statement sent to you online and print your statement from home, reducing your chances for fraud.
- Inactivity costs. Always remember to log in to your account regularly, contact the financial institution and if you receive an email or letter open it immediately to avoid inactivity.
Lastly, take time to view the fees you are paying and what changes you can implement to free up monthly costs. Who knows? You might save a lot of money making a few small changes. Select a financial institution that meets your needs. Be inquisitive, read your account agreement, review the products, materials and services that can help improve your knowledge of how to combat fraud and make you a better money manager.
In short, you can be a smart consumer by just by reading the fine print.
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