Is It Time To Ditch Your Bank? Here Are Some Reasons To Switch
Chances are, you’ve never switched banks. A recent study by Bankrate found that Americans enter long-term relationships with their banks, using the same primary checking account for over 14 years on average. But why do so many of us stay loyal to one financial institution? After all, we shop around for everything else — why wouldn’t we consider the best way to keep our money in order? With credit unions and online-only banks continuing to rise in popularity, traditional banks with brick-and-mortar branches are far from the only options we have. If you’re not in love with your bank — and who really is? — it might be time to make a switch. Ahead are some signs that you deserve better from your bank.
Your bank keeps taking your money
Remember the days of free checking accounts? Well, they’re probably not coming back. Nowadays, most big, traditional (as in not online-only) banks expect you to pay them for the great burden of storing your hard-earned money with them — even though they’re making money because of your money. At Bank of America, maintaining a regular checking account costs $14 a month unless you keep a daily minimum checking balance of $1,500 — and that’s daily, not monthly, so it can’t ever fall below $1,500 or you’ll immediately get hit with the fee — or at least $2,000 in a linked regular savings account. For its Advantage Plus checking account, the fee is $12.
Other big banks have maintenance fees too. CitiBank’s monthly charge for a basic checking account is $12 unless you meet their requirements, and Chase charges the same unless you meet slightly different terms. U.S. Bank, for its basic checking account, charges $6.95 a month. Wells Fargo's is $10. Of the most popular traditional banks, only Capital One charges no monthly fee.
Bank fees often hurt people with low incomes most. What if you’re currently living paycheck to paycheck or are unemployed, as so many are during the pandemic? An analysis of checking accounts by JPMorgan Chase found, in fact, that low-income families had an average rainy day fund of $700 in 2019, and it’s likely that many people’s bank accounts are even leaner in 2020. Over a third of women who were receiving the $600 enhanced federal unemployment benefits said that they wouldn’t last a month without it. Many banks did waive some fees in light of COVID-19-related hardship, or offer deferrals on credit card or loan payments, but if you want a minimum balance or maintenance fee waived, you’ll likely have to call your bank’s customer service and have your request approved on a case-by-case basis.
There are many other bank fees that can come your way too, whether it’s out-of-network ATM fees, returned deposit fees, or lesser-known ones like “inactivity” fees. But perhaps the most infamous are overdraft fees. In 2019, banks collected around $11 billion in overdraft fees, often from customers with an average balance of less than $350 in their accounts. Bankrate found that the average overdraft fee right now is $33.36, though some banks charge an overdraft fee multiple times a day if applicable, which can net you well over $100 in charges over a day.
