The Planning And Foresight blog has a useful warning for those of us who may not read all those e-mails and circulars from our banks with enough attention.
The slow collapse of our economy will bring about new fees and taxes so that the government and companies can maintain their cash flow. For example, my … local bank decided that all savings account that have been dormant for 6 months or more will be assessed a maintenance fee of $6.00/month. While $6.00 a month is a small amount, the total cost for one year is $72.00 for digitally maintaining an INACTIVE account.
There’s more at the link. It’s a very timely heads-up to us all.
Note that the $6.00 ‘maintenance fee’ is for doing nothing. The bank doesn’t incur any extra cost to let your account sit in its electronic records. It’s just trying to milk you for every penny it can suck out of your pockets. With money getting tight for almost everyone, look for more businesses – not just banks – to try tacking on additional fees and charges. I’m already seeing that in, for example, vehicle service centers. Their bills now often add a few dollars here and there for ‘consumables’ or ‘disposal of waste products’ – things that used to be non-itemized, covered in the overall charge. (I note that the latter hasn’t gotten any smaller after those line items were separated out . . . )
Peter
Peter, thanks for the link and passing along the info to more people. -K
TCF did that maintenance fee crap to me five years ago, I left the same month. Good warning though as I'm sure more will follow in their footsteps.
Fred
My wife, the banker of 31 years tried to explain this to me……Ha. Here is a decent technical site:http://www.greensheet.com/emagazine.php?story_id=2423
The key sentence is this one: "Many small banks, called "community banks," operate without a reader-sorter to process checks; they send their checks to an "item processor" to be encoded and cleared."
So what happens is when you think "your" bank is processing your checks and doing all of the accounting stuff….tain't so. Most of the smaller ones and now the mid-sized ones, are just offloading the expense of clearing your check to a third party clearing house. Why should they maintain a backroom group of folks doing all that work; when there are huge companies willing to do it for 0.02-0.05 cents per item. Oh, and the wife just said that EVERY single paper instrument of currency goes to the federal reserve….and they charge 0.02-0.05 cents per item. So "your" bank is getting hit with small expenses that are beginning to add up to a healthy sum.
So yeah, the small town bank; that is really scrounging for a cash flow, is using best business practice by applying a fee to maintain your account.
Oh, and the folks that keep $5-6 in an account to be able to cash their pay checks at a bank…….HAHAHA you are going to get hit hard with service fees!
The biggest thought throughout this whole thing is this: A bank is a business not a charity. It is there to make money for the stockholders not to make your life easier. Sorry to burst your bubble; but get used to the idea that banks WILL find ways to increase their revenue by any means necessary.
Steve
Old news; banks have done that since the late 70s in Kansas. (double digit inflation during the Carter years) Don't know if banks still do but they use to play the T-bill market with your direct deposits. The banks receive the direct deposits 3 day earlier than they are posted to your account. Banks also play the T-bill market with any checks you deposit that's why it may take up to 2 weeks for you to be able to access your funds.
And they wonder why certain members of society use cash-only for their transactions.
I just discovered, on examining my bill, that Verizon was charging me $5.00/month for not making any long-distance calls on the long-distance plan that I had. That plan got canceled.
As for the fee covering the check-processing outsourcing, notice that the original tale was about a dormant *savings* account – no check-processing required.
That's why most of my banking is done through a credit union. They're much less likely to do things like that.
I worked as an automotive tech and service writer in California from 1989 to about 1999. We charged "Disposal Fees", "Service Fees" and "Consumable Fees" everywhere I worked from a small franchise Tire store to the many dealers.
Never all three, but always at least one and usually some combination of two of them. You'll note too, that 'Tire Disposal Fees' have been charged by tire retailers for just about as long.
At least here in the People's Republic of Kalifornia, those fees have been here a very long time.
As for the bank fees, there are work arounds. Use your bank accounts.
Show some activity every month, if only to move money around. I'd think that most people should be dropping some small amounts into the savings account just to be building some cash reserve.
Given the ubiquity of online banking, moving sums from one account to another to meet the banks requirements should be something you do monthly, anyway.
Is it wasteful and a time sink? Yes.
Is it a hassle? Yes.
I count it as another of the costs of living in our now fallen, and post Christian world.
And, they are already using your money for their own gain anyway!
Several states have … self interested laws about dormant bank accounts.
In New Jersey, if you don't use your account in a while (I think 3 years, but it's been a while since I heard), the bank closes the account and turns the money over to the state treasury.
I used to have a bank account that kept 'accidentally' charging me monthly fees that they admitted were not valid – a few months of taking the time to get them refunded got old quick!
Watch out for minimum balance and minimum number of transaction requirements. Some banks will automatically upgrade you to one of their fancier accounts 'as a reward' and then charge fees when you don't meet the new, higher, monthly requirements.