Unless you have the time to be hyper-vigilant and read the small print on every bank brochure you may be better off just heading to a credit union.
For example, Business Insider gathered horror story after horror story from consumers who felt duped by their bank. One 18 year-old customer made the mistake of overdrawing her checking account when she purchased fries and a drink at McDonalds.
Because she only had $1.68 in her account and the food amounted to $4.32, the bank charged her a $35 overdraft fee, plus $6 for every day she was delinquent until she deposited more money in her account. Her “unhappy” meal at McDonalds ended up totaling $71 in bank fees.
Another story involved a journalist on assignment in Afghanistan whose debit card was canceled by Wells Fargo. "I was without food to eat, was under threat of being thrown in prison for non-payment of a hotel bill, and was told that my banker was unwilling to help because he didn't like my attitude," Paul Guillaume said in an email to Business Insider. Guillaume ended up spending $6,000 and two months in order to get home as a result.
Last year Consumer Reports predicted a steep rise in fees, noting that legislative requirements were going to motivate banks to pass along higher fees. Even those who banked solely with their primary financial institution may still be slapped with exorbitant fees.
“I didn’t have the time/patience or attention span to waste on watching my accounts so as to avoid the fees,” David Bookbinder, a computer technician from Peabody, MA wrote to The Consumerist, one of Consumer Reports’ websites.
A quick comparison between bank and credit union fees last year demonstrated a clear choice. Consumer Reports found that on average:
- Banks charged $10.27 for non-interest checking. Credit unions charged $6.
- Banks customers must have at least $1,115.97 to waive minimum balance fees. Credit unions require $500.
- Banks charged $6.95 a month for online bill payment. Credit unions charged nothing ($0).
- Banks charged $2.21 to use another bank’s ATM. Credit unions charged $1.07.
Considering these comparisons were made a year ago, its no wonder more consumers have grown tired of the big bank runaround and headed to a credit union.
What Every Consumer Should Know
Although credit unions have proven to be a better solution for many consumers, financial experts say that it’s still important to know your rights and what is considered to be a fair fee.
“People barely open up their statements because they don’t want to see the money they don’t have,” personal financial expert Suze Orman told Consumer Reports. “You’re now asking people to open a statement and try to find the fees they’re being charged.”
Consumer Reports says that every consumer should be mindful of financial habits and have a firm understanding of what their credit union or bank charges:
- Ask questions about fees for each account. When opening any new account, ask the member service representative to break down which fees apply and to lay out every scenario where fees may apply.
- Revise how you bank. If you are constantly overdrawn on your account, inquire about adding a line of credit to your account or setting up electronic notifications so you know when your balance falls to a certain level.
- Explain your situation. Because credit unions are based on the philosophy of people helping people, talk to a member service representative about having a fee waived, especially if you’ve been a loyal member or experienced extenuating circumstances.
- Go online. For both banks and credit unions, customers/members are often given a break on fees when they use more electronic services including online banking, bill pay, direct deposit, ACH and e-statements.
- Comparison shop. Before you pledge your loyalty to any financial institution do a rate and fee comparison based on your needs. Also, compare products and services to ensure the financial institution you choose meets your requirements.
- Inquire about a switch kit. Although account switching is never completely painless, many credit unions offer switch kits that may lessen the burden.
Tired of surprises from your bank? Find a local credit union and get the real story today.