I discovered this post linking to an article about Bank of America raising fees yet again. Their motto: "Higher Standards." I think it should obviously be changed to "Higher Fees."
When I was in college, I had a checking account with Bank of America. I took advantage of the overdraft "privilege" on my checking accounts quite a bit. Of course, it wasn't really a privilege; I just bounced a lot of transactions. I wasn't using software to keep track of my accounts, and I didn't keep a paper checkbook, and I'd always forget about those pesky utility drafts after spending a lot with my check card and then writing checks. It seemed my memory wasn't as good as I was giving it credit for and I'd probably pay a $30 fee about once a month. They were innocent mistakes, really–I wasn't trying to pay with money I didn't have. I just didn't know what I had. Luckily in about 50% of the cases I was able to sweet talk the branch manager at both Wachovia and Bank of America into refunding the charges. But I didn't learn my lesson for a long time.
Of course as I matured and started using Quicken and being more careful, I stopped incurring those overdraft charges. But the banks continued to treat me as if they were doing me a favor by storing my money. A free checking account at Bank of America requires direct deposit from an employer (tough if you work for yourself and don't use a payroll service) and you can't go inside to talk to a teller. For anything. To me, this says, "give us your money, but you're not important enough to us for us to actually allow you to communicate with our employees! Just talk to the machine and go away." I put up with this attitude for a while because I was OK with using the ATMs for most transactions and the large ATM network was very convenient. Plus, the online banking and online billpay at Bank of America is the best I've seen.
I switched to Wachovia in 2004 mainly because a branch opened up not five minutes from my house, and I did receive a lot of checks in the mail and thus spent a lot of time going to and from the bank to deposit them. (Checks don't do your cash flow any good sitting on a desk waiting for you to take them to the bank.) The service was somewhat better for consumers, and for a while it worked. Late last year I opened a business account with Wachovia where as part of a promotion I have no service charges for a year. It's very convenient and the business account is working very well for me. But part of that business account deal entails that my personal, consumer account (which is currently our joint checking account) is supposed to be free of all service charges for the life of the account. Plus, it's the Crown Banking account, which means supposedly you can get all of the traditional banking services for free or very little. I was particularly interested in getting a safe deposit box. I requested the change through the online banking messaging service and was told it was taken care of. And indeed the account type was switched.
Meanwhile, my fiance last year opened accounts for herself at our local credit union; she was eligible through her employer. Browsing through the promotional materials, I was struck by the tone of the brochures: it was as if she was the owner of the credit union and, thus, the people and services provided within were for her. (Contrast this with a private bank, which while welcoming me to the teller counter tells me I have to pay $5 for the privilege of handing them a check to deposit into my account. Or, I could switch to a type of account wherein I can get a lot of services for free in exchange for keeping $5,000 with them earning 0.05% interest. I, as the customer, lose each way.) All in all, I was really impressed with the credit union's attitude, and searching around the Internet, I found absolutely nothing but good things about the institution. Of course, that credit union doesn't have a large ATM network, and given the fact that I travel a lot, I valued the idea of accessing my money without fees whether I'm in New York, San Francisco, Seattle, Jacksonville, or home. So I didn't myself open accounts with them.
So at the beginning of this month I see this mysterious $20 service charge on our joint Wachovia account. Of course, I'm supposed to have this account fee-free for having opened that business account. So I e-mail the online banking folks and ask them very politely to refund the fee. They claim I have to fax my business account number and signature to their business department and give me a case ID number to reference. I diligently provide the information and fax it to them. Three days pass. I open a new case, reference the other case, and a bit more strongly demand that the fee be refunded. After all, $20 is $20. I get a response about five hours later, telling me I haven't met the minimum balance for my account type, that my account isn't a business account so I didn't need to fax the information to them (WTF? and they apologized for the miscommunication, whatever that was) and as a "one-time courtesy" they've refunded the service charge. It was clear they didn't even READ the other case, much less attempt to understand it. And I very much resent being told that they're giving me a "one-time courtesy" refund, as if following their printed advertising committments is a courtesy to me. That really pissed me off. The refund did post, but I haven't followed up to fix the problem and make sure it doesn't happen again because frankly I don't have the patience at the moment.
But my last straw with the private banking world was last Saturday. I opened my Bank of America checking and savings statements and the following jumped out at me (this is a quote):
"We reviewed our Bank of America Visa Check Card benefits and discovered that while some consumer check card benefits are frequently used by our customers, others are not. In an effort to serve you better, we have streamlined our consumer check card benefits to offer you the services used most by our customers.
"Effective 7/1/06, Bank of America Consumer Check Cards will no longer provide: Purchase Security, Warranty Manager, Concierge Services, Purchase Security/Extended Protection, or Travel Accident Insurance. Current benefits provided depend on check card type.
"Bank of America Check Cards will continue to provide our Total Security Protection package. For details, refer to the insert included with your statement or go to www.bankofamerica.com/checkcardupdate. US Airways Visa Check Cards are not affected by the changes."
Oh, so streamlining means removing services that I found valuable! I have used each of those services at least once. So they can streamline their fees and increase them to an astronomical limit, as evidenced in that article I linked to above, and then reduce the benefits and services provided to me already. I read that, and while it's not the biggest deal, I fumed. Higher prices, less service. I decided then and there that I was done with commercial banking. I was moving to the credit union.
At the credit union, I opened a checking account, which pays interest, and a money market account currently at 4.0% APY. That's nearly as good as the online only banks. I did all of this in a matter of 15 minutes and now the folks at our local branch already know my face and car. I paid $5 for a book of 200 checks (only $5! Bank of America sometimes charges $20-$30!) and monthly, $1 will be deducted from my checking account to be donated to the credit union's non-profit foundation. That's the only service charge. The rest of the services are free. Also:
- True overdrafts are $12 (compared with $20-35 at private banks). Not that I plan to make a lot of use of this.
- Overdraft protection transfers are 50 cents (compared with $5-10 at private banks).
- No fee ATMs are plentiful around our area, although not outside of the state really.
- Out of network transactions cost me 35 cents (compared with $2).
There are a number of other services the credit union provides for free or at minimal–and I do mean minimal–cost. And the personal attention and service is amazing. I have nothing but good things to say about this credit union. What a great deal.
If you are eligible for membership in any credit union, please seriously consider switching. I guarantee you won't regret it.
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or, more realistically, making sure that insurers do not make ex post offers contingent on ex ante contract choice