THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, July 30, 1995 TAG: 9507290262
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: Short : 47 lines
As banks of every size try to pare their overhead, small depositors are paying more for routine banking services.
``From the consumer's perspective, it's never been more important to learn about financial services and to comparison-shop,'' said Stephen Brobeck, executive director of the Consumer Federation of America, a Washington-based advocacy organization.
The financial deregulation under way since the early 1980s has forced banks to compete with others in the fields of lending and investing, including brokerage firms and mutual funds. Banks have responded by boosting their fees for certain services and closing their less productive branches.
``The industry suffers from overcapacity because banks became dependent on having bricks and mortar at every street corner,'' said Brobeck, who also serves as a public representative on the Richmond Federal Reserve Bank's board of directors.
``The good news is that banking services have become much more convenient'' because of greater use of teller machines and telephone banking, he said. ``The downside is that some banks are much more aggressive at maximizing their fees.''
But sufficient information is available for consumers to make informed decisions about checking accounts and other services. They need to shop more aggressively, Brobeck said.
``Institutions will not compete on price and service unless consumers comparison-shop,'' he said.
Here are some recommendations Brobeck has for consumers:
Find a bank account that requires a low minimum balance to avoid a monthly service charge and then maintain that balance.
Avoid bouncing any checks because of the high fees that banks have imposed for handling the checks.
Consider using a credit union. Over the years, requirements for membership in these financial cooperatives have been loosened, making their services more available.
``In general, credit unions have lower fees and lower low rates,'' Brobeck said. ``Also, they tend to be somewhat more sympathetic to individuals if they have financial difficulties.'' by CNB