Inside Financial Services

Lots and Lots of Loopholes

There are plenty of ways consumers can avoid banks' new fees

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Lost in the outrage of the Dick Durbins of the world regarding the new consumer fees banks are lately imposing in the wake of Dodd-Frank is this salient fact: a lot of banking customers won’t be paying any new fees at all. Their checking will still be free. At the typical bank, for example:

– If you have direct deposit, you won’t pay a fee.

– If you maintain a nominal minimum monthly balance, you won’t pay a fee.

– If you use your debit card at ATMs, but not for purchases, you won’t pay a fee.

– If you maintain a minimum balance among all your accounts, including savings and CDs, you won’t pay a fee.

I’m sure I’m forgetting other exceptions, but you get the picture. The fact is that the banking industry has figured out ways to make to make money from plenty of its customers without having to sock them with extra charges. (At the same time, banks lose money on a lot of their customers, too. Why the industry shouldn’t charge for a service customers willingly sign up for and find value in is beyond me.) Anyway, this new-bank-fee handwringing is way overdone. Whether they know it or not, many bank customers won’t likely be affected.

Ironically, the people who will be affected the most are the ones who can least afford it: low-income consumers. People on low incomes tend to be less likely to get paid via direct deposit, for instance. Often, they don’t have enough extra funds lying around to maintain a minimum savings balance, either. So many low-income consumers will either end up paying the new fees or will leave the banking system altogether. That’s not good, either for them or the system.

As often happens, new regulations hit the poor hardest. When Dodd-Frank and other recent banking regulation was being debated, this outcome was entirely predictable. Congress, notably Senator Durbin, only has itself to blame.

What do you think? Let me know!

7 Responses to “Lots and Lots of Loopholes”

  1. Stan Rulapaugh

    “. . . new regulations hit the poor hardest.” Yes, and the poor vote largly Democrat so they have only themselves to balme. Let the government create a bank to serve only those who can’t pay for services. Oh, I forgot. We have that. It’s called welfare, food stamps, earned income tax credit, etc.

  2. WHat da heck

    The people “who are leaving” the banking system you mention, are the same people who have
    never entered the system in the first place. The people who do their banking at check-cashing
    stores..at Wal-Mart…and the like. Those people don’t know how to balance a checking statement
    anyway…good riddance.

  3. Ralph DeGroff

    Tom, I understnd that the Government, or rather Congress, is proposing a tax on all banking transactions, including deposits, checks, automatic transfers, etc. I believe it is HR 4646??? Ralph DeGroff, an old DLJ banker.

  4. Vegasjoe

    Low income consumers can always join a state or federal credit union, too. Some banks, like BAC, really don’t want low income consumers and it shows. Why should they?

  5. Hawk

    Bottom lin: the poor always gets screwed. But I have to say deservedly so. Why??? Because they keep voting liberals into office who ultimately screw them. Another good example is NYC subway fares. NYC is run by ultra liberals who refuse to challenge the MTA because of the public service employee unions. Instead forcing the MTA to get its fiscal house in order this bloated monsterousity is kept a float by continually raising subway fares. I don’t like to pay more, but the financial impact to me is deminimous. However to a working stiff commuting in from Far Rockaway the impact is severe. When will they learn???? Probably never—so they will continue to get screwed.

  6. Sue Nami

    Those who have a problem paying $5./month for debit carding,
    please give up some smoking or some lotto.

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