America’s banks missing the mark on banking fees Posted by Michelle at 08/27/07 03:16 PM

Last Tuesday the American Banking Association (ABA) released a survey showing that “sixty-five percent of consumers spend $3 or less in monthly fees.”

Not the whole story. If you’re scratching your head and wondering how the ABA survey could show such findings, the answer is simple, they didn't ask the whole question. The ABA survey asked 1000 customers to “estimate” how much they spend on banking services such as checking account maintenance and ATM fees. But, a report "Out of Balance " released July 11. 2007 by the Center for Responsible Lending (CRL) , shows that banks are making big bucks in “overdraft” protection loans to the tune of $17.5 billion a year. The larger problem here is that most customers aren’t aware that they have overdraft protection as they don’t have to give their bank written consent before the loan is made to cover insufficient funds. The bank quickly recoups its loan plus a fee, as much as $34, automatically, from the customer’s next deposit.

The ABA study didn’t ask customers if they were happy with the fees they were paying for overdraft protection –loans that they didn’t request to begin with.

HR 946 (Truth in Lending) would require banks to get customer approval before providing overdraft protection, tell consumers how much the interest will be (often as much as 300%) and give the consumer choice when making a purchasing by prompting the customer to either accept the loan to cover insufficient funds or to cancel the purchase at the point of sale. Link to “Out of Balance” article

And, speaking of ATM fees… In July of this year Bank of America increased ATM fees to $3 for all non customer, an increase of 50% . What is the ABA’s response to high ATM fees charged to consumers by banks other that their own? “Avoid foreign banking fees by using your own bank’s ATM.” The ABA study apparently also didn’t ask customers how much they pay a month in ATM fees for using banks other than where their checking accounts reside. Check out our recent blog on the B of A's ATM fee hike.

The ABA survey was conducted by Ipsos Reid on July 24-26

This blog was submitted by Brent Scott, our new Financial Services Organizer.

comments (4)

1 Posted by M at 08/30/07 12:35 PM

Wasn't the overdraft protection explanation included in the account rules and regulations when you opened the account? I find it hard to believe that a bank can do anything without disclosing it to the consumer, since that would open them to a class action lawsuit.

Read the rules and regs before you sign anything, and ask lots of questions.

2 Posted by Vic Bailey at 08/31/07 09:17 AM

I think that Big Banks are like Big Business and Big Government, we don't need any of them. I remember when I was younger that banks knew their customers by their first name, now they don't care about your name, they just want your money(ALL OF IT).
We could put a stop to all of this, if we stuck together, and became Americans again, and not sheep, to be led to slaughter. Divide and conquer, is what all three of these organizations
know, but the American people are still in LA-LA
Land. They refuse to think that these people would take advantage of them, DAAA!
Wake up America, and free yourselves.

3 Posted by scott cady at 09/02/07 12:13 PM

Remember when people went to a bank and they paid a living wage?

4 Posted by Mike at 01/11/08 02:20 PM

Banking makes money by charging the stupid more and the smart less. Those of us that use our brains enjoy free checking and low interest rate loans. Banks loose money on us. The stupid spend money they don’t have and get fees, fall below balance marks and get fees, and are late on payments and get fees. The consumer can choose to be in either one of these categories. Most banks will willingly offer advice on how to avoid fees. This is an easy decision for them because it makes their employees feel good about their job, and most people are too stupid or too lazy to follow good advice, such as know your balance before you write a check. Most banks offer 24hour phone access to this information so you can call at 2AM from Walmart BEFORE you write that check for a 24 pack of Vienna sausages and a case of Diet Coke, but nope, they just write the check.

I have less than no sympathy for these people. I do however appreciate their sacrifice though so I can enjoy a better standard of living.