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Dear Liz: I opened a free checking account at a bank that has since been bought out by another. Recently the new owners started charging a $10 monthly service fee. How are they allowed to do this? Aren’t accounts “grandfathered”? Or is that up to the bank? In today’s economy with unemployment so high and more and more people, like me, living below the poverty level, this seems a step backward for any bank. With the recent bank bailouts and the bad reputation banks have, it would seem that “goodwill” would matter at least a little. When I asked the teller to justify the change she replied, “This is a huge bank. We don’t have to justify anything we do.”

Answer: Your teller gave you your answer. Goodwill doesn’t count for much when banks are trying to maximize revenue.

And there’s certainly no law requiring the new owner to honor the old bank’s promises. The new owners can charge new fees, alter policies and change interest rates on savings accounts and certificates of deposit.

Checking account fees are making a big comeback lately. Banks are claiming these new fees are necessary because regulators restricted one of their big sources of income: bounce fees. Starting last summer, banks were required to get customers’ permission before signing them up for “courtesy overdraft” services that allowed the banks to charge $35 or so each for over-limit transactions. When finally given the choice, many of those customers declined to opt in to the expensive programs and bounce fee income plummeted.

So banks are experimenting with other fees, but you still have options. Often the fees are waived if you maintain a minimum account balance, for example. In your case, that might be tough, so you might want to consider moving your accounts to another bank or a credit union. Credit unions are member-owned financial institutions, and many still offer free checking or have lower fees for low-balance accounts. To see which credit unions you might join, visit http://www.findacreditunion.com.

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Categories : Bankruptcy, Q&A



The suggestions given are best to follow if one doesn’t want to give away the service fee. In fact, if there are other options available for having a lower or no service charge then its smart to utilize such an option. By maintaining a certain minimum balance if the banks do not charge then its great but, if keeping minimum amount is not the option going for the credit union is the appropriate. Being aware of the consequences rather than having a blind faith on an apparent goodwill of the banks is safe.