Almost all Social Security recipients receive their monthly benefit payments by direct deposit to a bank account. Many retirees also have savings, CDs, IRAs and other types of accounts. But bank customers are getting hit with a barrage of new bank charges and higher fees for everything from replacing lost debit cards, to wire payments, and receiving paper statements.
Banks are raising minimum account balances and adding other new requirements making it harder to qualify for fee waivers, or even to close accounts. In addition banks are lowering the rates they pay on saving, charging for inactive accounts or the excessive use of accounts.
It’s a good time to review all your bank accounts for maintenance and activity fees. Depending on the type of account, fees can range from $4 a month to more than $20. Other fees, like overdraft fees, can cost $35 or more. You can still avoid bank fees and keep free checking and savings accounts.
• Find out if your accounts are “senior” checking and savings accounts: Many banks offer seniors preferred rates and terms and it’s a good idea to look for these types of accounts. The direct deposit of your monthly Social Security might be worth waiver of monthly fees, lower minimum balances, and free checks or debit cards. Compare senior checking and savings accounts with other types offered by the same institution as well as between banks.
• Learn the minimum balance requirements: Free checking accounts are becoming a thing of the past, but some banks will allow you to combine account balances that you have on deposit with their bank to waive fees. Ask what you need to maintain with your bank to avoid monthly fees.
• Change your checking account: If your checking account requires a higher minimum, it might be worth closing a high service charge account that you may have with another bank, especially these days when interest rates are so low, in order to qualify for lower or even no-fee banking elsewhere.
• Learn if there’s a fee for closing an account: Some banks are holding consumers hostage with closing fees that can be as high as $120 or more. When weighing the advantages of moving money to another bank, be sure to ask about fees for closing an old account.
• If you are comfortable using a computer try online banking: You can save considerably sometimes by using online banking — ask your bank if it has better rates for using it. Even if you prefer to forego electronic bill paying and stick to paper checks, your bank may offer reduced monthly account fees in exchange for retrieving your statements online.
• Call a branch: Banks don’t always do a good job of explaining fees on their websites, brochures, and the material you get in the mail. Often the quickest and best way to get help is to call your local branch bank. Customer service reps will want to know your pattern of banking and they often can steer you to the best account. It often helps to count the number of transactions you have in a month or to have a few statements on hand prior to the call.
• Ask to get a fee waived: To a bank, good senior customers are especially valuable over a lifetime because they use your savings to make more money. If you realize that you’ve overdrawn your account for the first time in years call or visit the bank, tell them you found the fee and simply ask to have it removed. Quite often if you are careful with your finances you can at least get one fee removed.
Sources: “Banks Quietly Ramping Up Costs to Consumers, Eric Dash, The New York Times, November 13, 2011.