Archive for the ‘Personal Finance’ Category


In the age of social media, customers can connect with an audience of millions of people, instead of just with their community of tens or hundreds of people. For banks, the inexpensive and fast social media model offers some convenience for connecting with customers, marketing services and maintaining a reputation as a quality service provider. However, banks face some unique limitations because of the nature of services provided that complicates their social presence.

How consumers interact with banks socially

In this age of social media, consumers face more choices than ever. They also face an increasing model of self-service: If you need a new bank, it’s easier than ever to research neighborhood banks online using sites like Yelp.com or Bankfeeinsider.com. After reading about the customer service, wait time, account types and account fees at six neighborhood banks, you can decide where to open a business bank account without ever even setting foot inside a bank. You might not even visit the bank’s website. When a business owner uses his or her social networks to make decisions, it takes a lot of power away from the financial institutions, who lose out on the chance to make a positive impression on potential customers.

Once a business owner selects a bank and opens an account, she may engage with the bank on social media. Unless the bank offers incentives via social channels, such as a YouTube video series on making budgets or saving for college, she’s more likely to take to Yelp, Facebook or Twitter to air a grievance with the bank.

How banks can use social media

While banks can use social channels to monitor customer feedback and problem-solve, there are some limitations. A small business owner may tweet a bank asking why their refinancing application was turned down. The bank cannot tweet back the details of the customer’s application, as this would be an ethical violation.

93 percent of consumers surveyed by the Financial Services Club felt that banks must focus on social media over the next five years to stand out within the marketplace. Simple ways to start include:

Developing a bank blog that raises customer awareness of services, either B2C or B2B
Monitoring social networks for community trends, then positioning your bank to creatively problem solve
Actively listening to customers on social media by soliciting customer feedback via Twitter, YouTube and Facebook — and then reviewing and acting upon the feedback received
Launching a charitable giveaway or contest via social media, where your bank donates to a chosen charity for every new account referred socially
Incorporating social media into your customer service as a first-line of defense
Planning smart for social growth

While there are many ways to incorporate social networking into a bank’s marketing, the right ways will focus on fulfilling a need that is going unmet. For some banks, this may be in marketing and growing a particular sector or service, such as retail banking. Others may need better customer service. Before committing to a strategy, perform a needs analysis to ensure that any social program is actively meeting your bank’s needs, not conforming to a trend.


These days it is far too easy to look at your bank statement and find that an unforeseen fee has shown up on your bank statement. Whether it is an overdraft fee, ATM usage fee, or simply a service change that your bank hid in the fine print, these are things you definitely want to avoid as much as possible. Here is a breakdown of the fees and some ways that you can potentially avoid them.

Service Charges

Some banks are certainly slicker than others at passing on service charges to their customers. However, some also make it more known when they implement such charges. So, whether it is obvious or not, you should always look at the fine print when opening a checking account. When opening an account in-person at a branch, be sure to blatantly ask the teller or bank employee helping you. They are obligated to tell you about any service charges if you ask.

ATM Fees

The best way to avoid ATM fees is to use machines owned or associated with your financial institution. Otherwise there is typically a fee per transaction that you incur on other ATMs. In some cases these fees can be a couple dollars, but in extreme cases they can add on a double digital amount. In an emergency this fee is bearable, but if you start to make it a habit it would save you a lot of money in the long run to find an ATM associated with your bank.

Overdraft and Insufficient Funds Fees

Another common fee related to checking accounts is that due to an overdraft or insufficient funds. These fees are common because of the large volume of transactions that typically occur on someone’s checking account statement. A great way to avoid such fees is to opt out of your bank’s overdraft protection, which although sounds enticing, can lead to frequent fees when you run out of funds. The downside to opting out of overdraft protection is that your bank will not cover any transaction you do not have sufficient funds for, and the transaction will subsequently be denied. The choice is obviously up to you, however, having a transaction declined is far less costly than incurring a $40 fee every time your checking account has an overdraft.

For more information of avoiding fees from your bank, check out bankfeeinsider.com, an excellent resource for all financial matters


At the center of much debate is the amount of money that banks charge their customers in fees. Customers may see fees on their bank statements for many activities, even normal use of their account. These fees may seem small on their own, but when added up, they culminate in billions of dollars worth of income for banks each year.

So, what are some of the fee types that retail customers may see from their banks? The following are just a few types of fees that are charged:

* Monthly fees for each account;
* Low balance fees;
* Overdraft fees;
* Debit card usage fees;
* Account maintenance fees;
* ATM fees;
* Card replacement fees;
* Paper statements;
* Wire transfer fees.

These fees add up to millions per year for banks, and in some cases comprise the bulk of a bank’s income. But just how much are banks making off these fees each year?

It is estimated that banks need to make $15 to $20 per month off each customer to enjoy the high profit margins that they were seeing before the changes in overdraft fees. A basic checking account costs a bank $200 to $300 per customer per year, so low balance accounts yield no profit and can sometimes even cost a bank money. As a result, banks are finding more things to charge seemingly minimal fees on. Some banks charge as much as $12 per month in maintenance fees; these fees are basically a charge for having an account.

A few years ago, governmental regulations were passed that put a ceiling on the amount that banks could charge customers for overdrafting accounts. This legislation aimed to stop “usurious” and unfair overdraft fees. According to a news piece published in the New York Times, these fees amounted to more than $12 billion per year. This helped banks offset the income that is lost by lending money at the recent low interest rates that consumers enjoyed. The lowering of interest rates alone culminated in an $8 billion per year loss of income for banks. Even with new legislation changing the amounts and methods banks can use to charge fees to customers, banks still made $32 billion in fees off customers in 2012.


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It used to be that you had to screw up to get slapped with a bank fee. Like spending the money before it’s in your account or being late on a payment. Now, consumers can do exactly what they’ve been doing for years and somehow still get slammed by fees … if they’re not paying attention.

Unfortunately, bank fees aren’t one of those inflationary items that rise and fall. They’re more like the price of postage stamps: The only way to go is up.  The one saving grace for consumers, it opens the door to competition, just like we’re seeing in the airline industry where some carriers are setting themselves apart by not charging baggage or other fees.

The number of banks offering free checking accounts may be on the decline but it’s nowhere near extinct. A recent Bankrate.com survey found that 88 percent of accounts are still free.

Local banks, credit unions and online banks tend to be more likely to offer free checking than their big bank counterparts.  If you’d prefer to stay with your own bank, ask about their policies for how to get fees waived or reduced.

Five common hidden Bank Fees you should be looking for:

  1. Subtracting Electronic Payments Early
  2. Ordering Transactions from High to Low
  3. Debit-Card Overdraft Fees
  4. Raising the Minimum Balance Required
  5. Returned Mail Fees

 

1.      Subtracting Electronic Payments Early

Wachovia customers who pay their bills online were used to having their payments deducted from their accounts and paid to the creditor on the same day. When the bank was taken over by Wells Fargo , however, many Wachovia customers were surprised to learn that the policy had changed, and the funds were being withdrawn from their accounts two to five days before the payment was due.

So, even those customers who are diligent, scheduling payments after their paycheck is deposited, are now at risk for an unexpected low-balance fee.

The unexpected fees caused such an outcry among former Wachovia customers, that Wells Fargo recently addressed the switch in a blog post: “At Wells Fargo, funds to pay your bills will be withdrawn from your account up to five business days earlier than they were at Wachovia,” they wrote. “With Wachovia BillPay you selected and had a payment sent on a Pay Date. No longer! At Wells Fargo, you enter a Send On date. Funds are removed from your account the next business day after your Send On date.”

2.      Ordering Transactions from High to Low

It used to be that banks posted transactions chronologically — so, the order they came in is the order they are paid out. Now, many are choosing to process the transactions by size — paying out the highest ones first, which increases the customer’s chance of getting snagged by a low-balance fee.

So, instead of maybe getting hit with one overdraft fee, the customer now runs the risk of being hit with multiple overdraft fees. The worst part is that bank disclosures about this are often vague. Many banks will not specify which way they will post your debits and others will be very vague with a statement like: “We can post credits and debits any way we like.” In fact, Wells Fargo was ordered by a California court to pay their customers $200 million for overdraft fees that resulted from reordering how they post transactions without clearly explaining to customers how they planned to do it ahead of time. When customers wrote a note to complain, that’s when Wells informed them that they were posting the transactions highest to lowest.

3.      Debit-Card Overdraft Fees

The whole purpose of a debit card was supposed to be that it prevented you from spending more than you have. But somewhere in the mid-2000s banks started routinely approving overdraft charges on a debit card and then slapping their customers with an overdraft fee. A few years ago, the Federal Reserve clamped down on this practice and told banks they can’t approve overdraft charges unless the customer consents. That’s when banks started sending out a barrage of “Sign up for overdraft protection or you won’t have a dollar to save your life when you need it” notices.

Those seemed like scare tactics for unnecessary services but they were quite effective and a lot of customers signed up for overdraft protection.

Citibank never engaged in the practice of charging overdraft fees on debit cards, and Bank of America responded very well to the Fed’s new rules, declaring they would no longer charge overdraft fees on debit cards. JPMorgan, Chase, and Wells Fargo continue to charge these fees.

While any offer of “protection” from a bank is likely to trigger doubt, it’s not a bad idea to sign up for overdraft protection if your bank is offering it for free.

4.      Raising the Minimum Balance Required

While everyone was watching to see if their bank started charging a monthly fee, many banks snuck up on them from behind and raised the minimum required balance to avoid a monthly fee.  If your balance falls under that amount, BAM! They slap you with a fee.

The average minimum balance among banks that have a minimum balance requirement jumped 15 percent last year to $3,800 from $3,300 in 2009, according to Bankrate.com.

5.      Returned Mail Fee

It’s important to inform your bank of an address change for your own protection, but it can also cost you if you don’t.

When you change your address, make sure the bank gets it right. Some bank customers have noted that their banks instituted a fee for not having the right address. After some investigating they found that even though they had notified the bank when they moved, the bank had input the address incorrectly.

BankfeeInsider Tips on how to save money on hidden bank fees

Here are some Insider tips to keep more of your money in your account:

  • Read all disclosure documents thoroughly and monitor your bank statements closely.
  • Sign up for email or text alerts so you know when your account balance is running low.
  • Ask questions of the bank about the types of fees they charge and the terms and conditions of the account.
  • Consider linking your checking account to a savings account to cover potential overdrafts.
  • Shop around. Compare banks and find one that charges the lowest or fewest fees.
  • Provide yourself a cushion. This is easier said than done, but it can save a lot of heartache down the road.
  • Spread out transactions to avoid getting caught with insufficient funds no matter what trick the banks pull.
  • Know the difference between opting out and opting in. If you opt out of overdraft protection, you won’t be able to use your debit card if you don’t have enough money in your account.  You may be embarrassed, but you won’t pay a fee.

The most important thing for consumers is to remember that in this brave, new world of hidden bank fees — no one is safe. Read the fine print — and no skimming!

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