Analyzing Bank fees

Hello and welcome to my new blog focusing on ways a college can improve their finances currently and ways they can improve their finances after graduation. This week I am going to focus on watching fees ranging from overdraft fees to atm fees that banks charge which most of the time are fairly easy to avoid.

First I am going to look at overdraft charges on Debit cards. Most banks allow (as of today) for customers to overdraw on their account charging a substantial fee.

For example, Bank of America will charge a $35 overdraft fee if you overdraw your account over $10 at the end of the business day (as a courtesy BofA does not charge the overdraft fee for ammounts under $10). Bank of America does give you a one time pass, called "stuff happens", on the overdraft fee. Also for every 5 consecutive days that your account is overdrawn BofA charges a $35 fee (on top of the inital fee). Overdrawing on your BofA account can be avoided by using their free overdraft protection that will tap a credit card if you overdraw, avoiding any fees.

As harsh as BofA sounds, it is not as bad as the competition. JPMorgan Chase for example charges what seems to be a low $25 overdraft fee, but it is applied if you even go $0.01 over, unlike the $10 buffer BofA gives you. After you overdraw once the fee goes up to $32, and after five times it goes right up to $35. In addition JPMorgan Chase allows you to tap a credit card for overdraft protection, but they charge a $10 fee for this service (compared to no fee for BofA) and JPMorgan Chase does not give you a "stuff happens" pass like BofA. Overall the $10 buffer zone that BofA offers and the "stuff happens" pass leads me to favor BofA over JPMorgan Chase based on overdraft fees.

Looking at ATM fees its important to realize that their are almost always multiple fees when you use an ATM other than your bank's. For exapmle if you walk into mcdonalds, odds are they have one of the 99 cent Select-A-Branch ATM's, the 99 cent promotion is somewhat true, but mostly false. When you withdraw $20 from a Select-A-Branch ATM, Select-A-Branch goes and withdraws $21 (in this case) from your bank account for the $20 + $1 fee. However Bank of America sees that you used an ATM other than their own and they charge a $2 fee ($5 if international), so you are in effect paying a $3 fee in this case.

Now if you are banking with JPMorgan Chase they charge a $2 fee just like BofA. So in the category of ATM fees, BofA and Chase are a tie in my book since both of them have the same fees.

Ways of getting around some of these fees (espescially the ATM fee) is downloading (if you have a blackberry or iphone)the respective smart phone apps that the banks put out. These apps allow you to click and see exactley where in the area the bank's ATM's are (and for BofA no need to enter an address, since it uses your phone's gps).

Overall be cognescent of you banks fees, considering they are 99% of the time easy to avoid and can save you a good deal of money over the long term.