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3 Mega-Banks Screwing You With Sneaky Fees -- Again

Consumers were outraged when Bank of America announced a $5 debit fee last fall. Undeterred, some banks are now quietly imposing even more fees.
 
 
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In recent years, the U.S. government has imposed important new regulations on big Wall Street banks -- rules designed to keep banks from preying on consumers. But ironically, the mega-banks have responded to those regulations in a decidedly anti-consumer manner, with a relentless campaign to impose unfair new fees on the very consumers the regulations were designed to protect.

For years, big shiny banks like Chase and Bank of America were where you went to get "no fee," "no hassle" checking accounts. We all got so used to seeing ads touting free checking accounts that many of us just came to accept free checking as the norm. At the same time, many of us have had our checking accounts with the same big bank (and/or the big bank that bought out our original bank) for years, giving some of us the impression that we're still getting the same great deal as when we signed up.

But think about it for a second: How many advertisements for "free checking" have you heard in recent months? Probably not very many, because free checking is no longer standard at big banks. Quietly, banks have ratcheted up the fees associated with their accounts, and now, according to research firm Moebs Services, virtually all of the big banks have stopped offering free checking accounts. At the same time, the banks have increased fees for everything from lost debit card replacements to account minimums and even the "privilege" of speaking to a bank teller -- fees that often disproportionately affect poor consumers who may have less flexible schedules and a harder time maintaining account minimums.

Banks have long been fans of charging egregious, often hidden fees, but new regulations have made some of their old favorites illegal. For instance, banks can no longer charge those outrageous $35-per-transaction overdraft fees without giving customers the option to opt-out of overdraft protection, and they can no longer change interest rates and fees without informing customers. But as under-regulated industries in a capitalistic system are wont to do, the banking industry has focused on increasing profits, lousy economy and new regulations be damned. And if the banks can't make money the old-fashioned way, they've decided they'll just have to get creative with how they roll out their new fees. For the banks, getting creative means adding fees that specifically target lower-income customers -- the customers who are struggling the most in this economic downturn.

The banks' efforts to impose new fees have not been uniformly successful. Last fall when Bank of America tried to pave the way for other banks to charge monthly fees for debit card use, the consumer backlash was so huge that not only did Bank of America back off, Chase, Citigroup, and other big banks pre-emptively shied away from the idea too.

But apparently that backlash wasn't enough for the big banks to give up on new fees altogether. Below are several banks that have announced sneaky new fees recently.

1. Bank of America may charge up to $25 per month for checking accounts.

Bank of America, which was the target of so much consumer outrage over its proposed $5 debit card fee back in the fall, is now considering a fee "overhaul" that could significantly increase the cost of a checking account for millions of customers. The Wall Street Journalreports:

Bank of America pilot programs in Arizona, Georgia and Massachusetts now are experimenting with charging $6 to $9 a month for an "Essentials" account. Other account options being tested in those states carry monthly charges of $9, $12, $15 and $25 but give customers opportunities to avoid the payments by maintaining minimum balances, using a credit card or taking a mortgage with Bank of America, according to a memo distributed to employees.

If you're a lower-income Bank of America customer -- someone without a mortgage who doesn't keep a ton of cash in reserves -- you can expect to pay more, probably sooner rather than later. Facing declining revenue, Bank of America CEO Brian Moynihan "is determined to plow ahead," according to the WSJ. (Another reminder of just how expensive it is to be poor.)

Meanwhile, Bank of America and its competitor Chase have both admitted they will also begin focusing more attention on wealthy clients ( in Chase's case, customers with at least $100,000 in the bank) and less attention on lower-income clients who make the bank less money, potentially pulling out of markets that are lower income.

"Both Chase and Bank of America have publicly said that they want to focus on up markets and abandon the mass markets," PerkStreet Financial's Dan O'Malley told U.S. News & World Report. "They're trying to push out the typical average American from the bank and focus on the wealthy instead because they don't make as much money off of the average American."

So not only will lower-income customers potentially be slapped with more fees, they'll also have fewer big banking opportunities in general.

2. Wells Fargo starts charging $15 per month for non-wealthy checking customers.

Wells Fargo was one of the banks to reverse its plan to charge monthly debit card fees after this fall's Bank of America PR debacle.

But just a few weeks later, Wells Fargo was rolling out new, different fees. In November, the bank started charging a $15-per-month fee to checking customers with less than $7,500 in their account or with less than three accounts at the bank.

3. Citibank's fees go sky-high.

Not deterred by the outcry over Bank of America's $5 fee, in December Citibank announced it would begin charging $20 per month to mid-level checking customers with less than $15,000 per month in the bank (up from the previous $6,000 minimum). On top of that, the bank started charging its EZ checking account customers $15 per month for keeping less than $6,000 in the bank. Also, the monthly fee on Citi's Basic Banking account went up $2 per month, to $10, and there are now additional ATM fees for many Citi customers using non-Citi ATMs.

What should big bank customers do about these fees? One obvious solution is to stop doing business with these banks.

The Move Your Money campaign has been hugely popular since the start of the Occupy movement, with a reported 5.6 million customers having ditched their corporate banks since early November. Still, many people have yet to make the leap from corporate banks to credit unions or smaller financial institutions.

Convenience is one of the most-cited reasons for not joining a small bank. Consumers worry they'd have to pay more ATM fees because they'd have fewer money withdrawal opportunities than at a bank like Chase.

As the Move Your Money campaign points out, many credit unions are part of ATM networks like AllPoint that offer tens of thousands of fee-free ATMs around the country. But even if your banking options do become somewhat more limited by joining a smaller institution (and it's true, they probably will to some degree), you have to ask yourself: At what point is the convenience of a mega-bank -- never being more than a few minutes from a branch, for instance -- outweighed by the mega-banks' decidedly inconvenient, ever-increasing fees? Will you really save yourself significant time or money, not to mention mental wellbeing, by staying with your corporate bank?

Increasingly, that answer is no.

Lauren Kelley is an associate editor at AlterNet and a freelance writer and editor who has contributed to Change.org, The L Magazine and Time Out New York. She lives in Brooklyn. Follow her on Twitter here.
 
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