- The Dodd-Frank Wall Street Reform and Consumer Protection Act, passed in 2010, was intended to shore up bank reserves and prevent institutional failures on the scale of the 2008 crisis. While the intent was positive, the devil is always in the details. Legislators demonized large banks and often penalized their business practices, while the media and consumers nodded in agreement. Part of the legislation cut the amount that banks could receive on merchant transactions when consumers used their Visa and MasterCard. Banks had previously used those fees to provide free checking and other services to consumers. Now that those fees are drastically reduced, banks are calling on consumers to pay for the services they use. This transparency in pricing allows the consumer to compare prices on accounts and select the best based on how the account is used. Bottom line: you can thank the current legislators for this fee.
- Get the facts before getting mad. I called Bank of America, and they offer better fee structures for their relationship accounts. If you have a Wealth Management account, Advantage Checking or Interest Checking account, your fees can be waived. The Interest Checking requires a daily balance of $1000, or maintain $1800 in a related savings account. If you are keeping at least some money in an emergency fund, this is not an extravagant amount to keep on hand. Bottom line: the fee may not even apply to you.
- Get the facts before switching your accounts. Other banks are planning on charging these types of fees as well, so look before you leap. Also, other banks will offer similar deals for relationship based accounts. Local and community banks may use this as a way to gain deposits, so check their account fee structures as well. Bottom line: there are ways to avoid this fee.
- Let’s look at this from the bank perspective. Banks are corporations, and as such they have no conscience and no soul. They are in place to make money for shareholders. And if you have any type of retirement account, (IRA, 401(k), pension or other) you are probably a bank shareholder and are directly affected by bank earnings. I assume you would be mad if an investment of yours performed poorly because the company didn’t charge customers appropriately. Bottom line: customer fees help maintain your investment value.
The Dodd-Frank Act is designed to affect almost every aspect of banking and finance. If you don’t like the $5 fee, guess what? You will probably see more. This country voted for change, and here it comes.