So your bank has angered you to the point where you are going to send them a message. No longer will you be a slave to rising fees and reduced services--you are going to a credit union to finally have your money work for you.
While your bank swan song may be full of the best of intentions (move your money and leave the fees in the past), your bank knows what you are up to and is planning to suck the last bit of capital blood from your account.
According to consumer advocacy group, Consumers Union, some of the biggest banks in the country slap their fleeing customers with fees as they try to close their accounts.
"Banks have added all sorts of fees on basic checking accounts, which has raised alarm bells," said Suzanne Martindale, staff attorney for Consumers Union. "But when you hit a breaking point and want to move your money, guess what you encounter: more fees."
In fact the group reports it could cost the average consumer up to $55 in fees just for closing their accounts. Some of the biggest offenders include JPMorgan Chase, Bank of America, Citibank and Wells Fargo with some charging exorbitant fees if the account is closed within 90 days.
For example, Consumers Union reports that both BB&T and Citibank charge $25 if the account is closed within 90 days. US Bank, HSBC, and PNC Bank charge $25 if an account is closed within 180 days of opening.
Customers Aren’t Paying Closed Account Fees
Sick and tired of being taken advantage of, former bank customers have become fed up and even started ignoring fee payment requests.
Mark Henderson, a Chicago business owner and Bank of America customer said that after an exhausting attempt to reconcile an account he closed with Bank of America 18 months ago he gave up. "Now I just tear the statement when it comes," he said.
Consumers Union found that Bank of America’s policy is to reopen closed accounts if any activity is posted to the account. Bank of America spokeswoman Betty Riess advises customers to stay on top of all transactions to ensure pending payments have been addressed before the account is closed.
"If we receive a deposit or credit to the account after it has been closed, we may re-open the account to accept the item, and the account could be subject to associated fees. We disclose this to customers," she said.
In addition to Bank of America, Consumers Union found that Chase would reopen an account if it receives a deposit on a closed account as well. Former bank customers may be more vulnerable to penalty fees after switching banks if late payments were not addressed by the merchant until after the account was closed.
How To Get Around Closed Account Fees
Feel a little helpless and an impending sense that you are going to be stuck with fees no matter what you do? There are ways to avoid getting slapped with a closed account fee and slide your wad of dough over to a credit union without having your bank haunt you.
Wait for all transactions to clear. Instead of extracting all your money from the bank account, leave some cushion and build your new credit union account using your next paycheck. Maintain enough money in your former bank account to cover any transactions occurring over the past month.
Don’t write any new checks from your bank account once you’ve decided to leave. The minute you decide to move your money, stop writing checks and write down the date of your last check. Track that check using online banking to ensure the very last transaction was satisfied before officially closing the account.
Transfer remaining funds electronically. Once you are sure every transaction has been satisfied, obtain the account and electronic routing number from your credit union and perform an electronic transfer using online banking. In some cases, you may not see your bank funds posted in your credit union account for a few days, however doing it this way should not incur an additional fee (the way a wire transfer might).
Don’t have a credit union in mind already? Find a credit union near you and discuss money movement options with your friendly member service representative.