By Sharon Lechter
What can $5 buy you these days? In Bank of America’s case, a perfect storm.
The backlash that ensued was fast and furious when BOA – the nation’s largest bank – announced the new $5 monthly fee on debit card customers. Whatever your opinions, I’m encouraged by at least one unintended consequence – we’re all talking about banking fees. Keep talking, and – well, you know what my advice is. Educate your children, too!
Surely BOA didn’t anticipate the fury this new policy would incite. The public outcry seemed a “boiling over” – the cauldron, of course, our nation’s struggles – a stagnant economy, high unemployment and distrust toward all things corporate.
Of course, there are at least two sides to every story.
So let’s stand back for just a moment and consider the broader picture, then make an application to our own personal financial goals. How many people honestly say they understand each and every fee their banks excise? How have recent legislative changes impacted financial institutions such as Bank of America? Is it fair for banks to charge fees for debit, checking and other ancillary services?
To get some perspective, consider the following events that led to this moment:
—Bank of America received $45 billion in “bailout” money in 2008 and 2009, as did Citigroup Inc., the most of any bank. (Bank of America repaid the money in late 2009.)
–The Wall Street Reform and Consumer Protection Act was signed into law in 2010 and took effect this October, 2011, imposing a limit on what banks can charge retailers for debit card transaction. (24-cents each)
—Bank of America was the first to take the plunge, excising fees that will affect basic checking accounts, and a monthly $5 charge that applies to purchases made with debit cards. ATM withdrawals, online bill pay and transfers made using cell phones are exempt.
You can read the scores of articles and opinions volleying blame for the response to Bank of America’s decision. Were the fees designed to make up for the loss of BOA’s projected revenue by passing the cost on to consumers? Did retailers pass their savings on to the consumer?
Do Americans simply feel entitled to free services from banks that secure, protect and invest our wealth? Or do increased regulations mean the consumer is on the hook to pay the piper? What are your thoughts as to what’s fair?
Whatever your answer, I believe it is incumbent upon the consumer to take a proactive role in negotiating the fees imposed by financial institutions. Choose wisely. You are the customer, so exercise your buying power. A few tips:
—Read the Fine Print. When you open a new account, take the time to read the terms. Investigate. Does the bank charge fees for basic checking and savings accounts? To use debit cards? Negotiate. Ask if the bank is willing to waive the fees.
—Negotiate a better deal. If you’re a current customer and aren’t certain what kinds of fees you’re already paying, get in front of a personal banker. If you aren’t taking advantage of banking online, ask for help navigating the system. If you’re a long-time customer, they won’t want to lose your business. ASK if they will consider waiving fees.
—Exercise the “Power of Walking Away.” Compare fees and services offered by the many banks competing for your business. Don’t just accept what they offer without a willingness to walk across the street to do business with a bank who that matches your criteria.
—Educate your Children. We have to teach our children to engage in managing their finances now, so they make wise choices for themselves in the future. Take them with you when you visit the bank. Open a savings account on their behalf if you haven’t already, and encourage them to ask, “are there any fees for doing business with your bank?”
Banks big and small won’t survive without your money. Take advantage of the storm, and make certain the waves roll in your direction.
Sharon Lechter is an entrepreneur, author, philanthropist, educator, international speaker, licensed CPA and mother. She has been a pioneer in developing new technologies, programs and products to bring education into children’s lives in ways that are innovative, challenging and fun, and remains committed to education – particularly financial literacy. Co-author of the bestselling book, Think and Grow Rich-Three Feet From Gold with the Napoleon Hill Foundation, Rich Dad Poor Dad and 14 other books in the Rich Dad series, Sharon’s most recent book project is Outwitting the Devil by Napoleon Hill- a manuscript hidden for over 70 years- annotated and updated by Lechter for the modern reader.
She is the founder of Pay Your Family First, a company dedicated to empowering children and families to build prosperous futures through financial literacy education. With innovative, thoughtful and easy-to-understand programs and products, such as the ThriveTime for Teens board game and YOUTHpreneur entrepreneurial programs, Pay Your Family First teaches the practical skills that will give a new generation the self-assurance to become masters, instead of slaves, to their money.
Sharon served as a member of the first President’s Advisory Council on Financial Literacy, a national spokesperson for the National CPAs Commission on Financial Literacy, and an instructor for Thunderbird School of Global Management’s Project Artemis.
She is also a member of the National boards of Childhelp, Women Presidents’ Organization, and EmpowHer. For more information visit https://www.sharonlechter.com and https://www.payyourfamilyfirst.com.