Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, May 15, 1995 TAG: 9505170017
SECTION: MONEY PAGE: 6 EDITION: METRO
SOURCE: JANE BRYANT QUINN WASHINGTON POST WRITERS GROUP
DATELINE: NEW YORK LENGTH: Medium
Banks usually don't mail you Red Alerts when new fees are added or old ones increased. More often, the notice is in legal language and fine print. It gets tucked on a card that's mailed with your regular statement. You may not realize for months that you're paying for a service that used to be free.
Even ``free'' checking accounts, with no minimum balance or monthly fees, may be charging you more for printed checks, more for checking your account balance, more when you use an ATM, more for bouncing a check.
The First National Bank of Chicago made headlines recently when it set new rules for people who choose checking accounts with no minimum balance. Starting this month, those customers pay $3 for using a human teller and $2 to handle bank transactions by phone. The bank wants them to use ATMs instead - saving the tellers for people who keep higher deposits.
That's probably OK with depositors who use ATMs as a matter of course (First Chicago's ATMs are free). But those who want even limited access to a free teller will have to keep higher balances in the bank, pay fees, or have their paychecks or Social Security checks deposited electronically. If you live within the bank's rules, however, you'll be able to transact basic business free, says First Chicago spokesperson Thomas Kelly.
No matter where you bank, you can probably save money by knowing more about your account. Start by getting a list of all your bank's charges; it has to give you this by law. Analyze your recent bank statements. Circle every fee and add them up.
Then make a written summary of the way you use the account: How many checks do you write each month? How often do you use a teller or the ATM? How low does your monthly balance go? How many incidental services do you use? How large are your savings deposits there? How often do you make deposits (some banks now charge 25 to 50 cents just for depositing money)? How much interest have you earned on your interest-paying checking account and does it exceed the fees you're charged?
Armed with this information, sit down with a bank employee and say that you can't afford the fees. Banks have many different types of accounts. You may find one that both serves your needs and costs you less. Here are some ideas for paring down costs:
Try no-frills checking. Most banks now offer some variety of bare-bones account, often with no minimum balance, low fees, and six to 10 free checks or ATM withdrawals every month. To minimize the number of checks you write, use your credit card for basic expenses and pay with a single check each month.
Don't marry yourself to interest-paying checking. To earn interest, your balance can't fall below a certain amount - typically $500 to $1,000, but sometimes higher. If it does, you're charged a fee that may amount to $7 or more. If your balance falls below the minimum more than twice a year, you might pay more in fees than you earn in interest. Consider switching to a no-interest account with a lower minimum balance.
Consolidate your accounts. Don't have a checking account in one bank, a savings account in another and a certificate of deposit in a third. The more business you do with the same bank, the better your chance of cutting fees.
Watch your debit card. These cards act like checks. When you use them for purchases, they withdraw money directly from your checking account. You may find it cheaper to charge purchases on a credit card, then pay off the card at the end of the month.
Ask what you can do to lower fees. For example, you might use ATMs less (get your weekly money all at once), have your paycheck deposited electronically or accept a checking-account statement in lieu of all your canceled checks.
Look for institutions that charge less. Smaller banks and credit unions traditionally offer the best deals.
by CNB