How to cope with the end of free checking
Dear Liz: I’ve been reading a lot lately about how banks are going to do away with free checking. I’m on a fixed income and can’t afford to pay a bunch of fees. What can I do?
Answer: First, scrutinize every mailing or email you get from your bank to learn about any changes that might be coming to your account. Many banks will still allow you to avoid fees by keeping a minimum balance, arranging a direct deposit or making a certain number of debit card transactions. If you can’t modify your banking habits to avoid the fees, consider switching your account to a credit union. These member-owned institutions are likely to continue offer free checking or to at least make it easier to qualify. You can search for credit unions for which you might be eligible at www.findacreditunion.com.
Beware “exit fees
Dear Liz: My wife and I are rolling over our bank certificates of deposit to another investment company to consolidate our holdings. Two weeks before the CDs’ maturity date, we notified the bank and filed the necessary papers. The bank didn’t complete the rollover for two months and then withheld $50 for something it called a “Trustee to Trustee Transfer Fee.” What is this, and can the bank make this charge?
Answer: Such “exit fees” are a way for banks and brokerages to nip an ounce of extra flesh from departing customers. Many financial institutions charge them, but they often aren’t well disclosed and few investors know to ask about them. You’ll know better next time.
What you gain from switching to a credit union
Dear Liz: I want to stop supporting the greedy banking industry by changing my checking account from a big bank to my local credit union. But I’m worried I will have to give up services I like, such as online banking and free bill payment. What will I give up if I use a credit union?
Answer: You may not have to give up anything, and you may gain a few things, depending on how you bank.
Credit unions are member-owned, which means they don’t have to worry about making profits for shareholders. That translates into better interest rates and lower fees than banks. Many people discover credit unions when they’re looking for auto financing or personal loans, drawn by credit unions’ typically lower rates compared with those charged by banks.
You may find banking with credit unions cheaper in other ways. Most have very low minimum balance requirements for free checking and savings accounts. Many credit unions are also members of the Co-Op Network, which offers fee-free access to more than 28,000 ATMs nationwide, far more than any bank.
That doesn’t mean they’re right for everyone. While most credit unions offer online banking and free bill payment services, for example, their other services may vary. Some offer real estate loans, for example, while others don’t.
Before you switch, you’d be smart to review your transactions over the past few months and think about what loans or services you’re likely to need in the future. Make a list and ask your credit union what it provides and what fees it charges.
If you decide to move, open your new accounts first and set up online access so you can monitor your transactions. Then move any direct deposits you have, such as your paychecks. Change any automatic debits and recurring payments so they come out of your new account. Keep open your old accounts until all payments have cleared, then shut those down.
To find a credit union you can join, visit www.creditunionfinder.com
Move your money away from fee-hungry bank
Dear Liz: My online savings account has been taken over by another bank, which started charging a fee to transfer funds to external accounts. I feel like my savings are trapped and I want to move them.
But if I try to transfer the money to another bank, will I have to pay the fee?
Answer: Perhaps yes, but a one-time fee is better than being nickel-and-dimed to death.
One of the big advantages to online savings accounts — besides better interest rates — has been the freedom to save and move your money around without paying onerous fees. It’s unfortunate your new bank has changed the rules, but you’ll find plenty of competitors that will be delighted to accept your money without charging account or transfer fees.
Consider chatting up one of the bank’s phone representatives or branch tellers to see whether there’s a way to get your money out for free. If not, pay the transfer fee and consider it a small price to get free.
Will new bank cash old cashier’s check?
Dear Liz: I have a pack-rat mother. During my most recent “purging” of her boxes of papers, I found a cashier’s check for almost $2,000. The catch is, it’s dated Jan. 15, 1986, and was issued by a bank that’s since been acquired. What are the chances of the acquiring bank honoring the check? My mother is wealthy enough for this to be an amusing, albeit embarrassing, story, but I hate the needless waste of money.
Answer: You and your mother can present the check to the bank, but most likely you’ll be directed to your state escheat office, where unclaimed bank funds typically end up. You can find a link at www.unclaimed.org, a site run by the National Assn. of Unclaimed Property Administrators.
