When I was a kid, I had a passbook savings account, and every time I went in for a deposit, I got to see the exciting little interest cropping up. It was great.
When I was a teen, I had a free checking account. I got a $50 savings bond for opening the account and free checks and a debit card. I didn’t have the money for savings.
For the past several years, I’ve been using a prepaid debit card from Wal-Mart that’s free with my direct deposit. I have to pay $3 to put cash on it, or $5 to withdraw from an ATM, but cash back with purchases is free, so it’s worked well.
I’ve started a business, so I need to be able to accept checks and credit card deposits, so I got a checking account. There were no bonuses for opening the account. I got a debit card but had to pay for checks- AND they’re charging me $15 a month in fees! I’m not sure I’ll make enough money to cover that $15, even if I compare that to what I’d pay in check cashing fees.
I’ve actually made some money now, and I thought about opening a savings account. There’s a fee on those too! $15 a month. They give you .05% interest, which if I’m reading it right is five cents a year for every hundred dollars. So to start… I dunno, SAVING any money in this savings account, I’d have to deposit $30,000 to break even on the charges with the interest. Wait, no, that’s $30,000 to pay for one month’s fees… So I’d have to maintain a balance of $360,000 to not pay fees?! If I had that much money lying around, I’d invest it, not just dump it in a low-yield savings account. WTF?! No wonder banks are failing.
So, I’m not so much interested in the why of this as to how best to work the current conditions. If I have, say, $1000 that I want to put away as an emergency fund starter, is my best option really to stick it under my mattress now, or am I totally misinterpreting my bank’s policies, or does my particular bank just suck? My husband got the account, and I’m not sure he really shopped around. For the record, I’m in central CT, USA.
You can’t compare business checking accounts with personal ones; there are always fees for business accounts.
My advice is that if you’re paying money - any money - for a personal checking or savings account, get a new bank. Or look into credit unions.
It’s a personal account. I just use it for both, since it’s a very small business and easy to keep track of.
Shop around then, as was suggested. Check out the websites of local banks and credit unions, and see what you can get.
I bank with Chase; their basic savings account is $4/month, or free if you keep more than $300 in there or have an auto-transfer set up for $25+/month from a Chase checking account. Their most basic checking account is $14/month, but I don’t have to pay the fee because I have my paycheck direct-deposited into that account. There are a couple other ways to get around the fee as well.
Your particular bank just sucks. I haven’t paid any fees for any transactions in years. My bank even pays those pesky ATM fees for me, so I can use any ATM, anytime, anywhere, and not pay a dime for it. I even find it slightly amusing that the reimbursement gets entered on the ledger before the withdrawal, so for a split second, they’ve paid me to withdraw money.
Investigate credit unions. I even have a business account (Proprietorship, not sure if they do corporate accounts) at one.
There have always been banks that catered to middle-class vs. upper-class, to small business vs. big business, etc. You’ll have to be the one who digs around and finds the right mix of what you need, but it’s probably out there.
If this is scary to you, running your own business will quickly sound about as appealing as being the first off the boat at Normandy. I currently have about $6K a month in fixed expenses and payroll and my business is small.
Oh, and in response to your statements about what banking was like as a kid/teen - most banks offer no-fees accounts to youth up through college students. So part of the answer to your question is, “You grew up.”
Also, for some reason savings accounts in most brick and mortar stores suck right now. You can do better (but not great) on online savings accounts like discover bank and ING. They usually have lower minimums, no fees, and higher interest rates.
I bank with a small local bank. No fees, and the one time I wrote a personal check for more than my balance they moved enough from my business account to cover it. Cute tellers as well!
Banks offered more services when I was a kid. Of course, when I was a kid interest rates were 10%+, so there was probably more money to be made in branch banking than when interest rates are at 1%.
Shop around, even for business accounts you should be able to get free checking + the business checks + a deposit stamp at the very least.
Banks, like many other businesses finally discovered you do not have to spend money to keep and attract customers. They’ve found you can actually get their customers to pay them, and they still keep coming back, and forking over more money.
Bank of America is getting heat because of their new $5.00 a month debit card fee. Yet they also know while there is much anger and frustration out there, they know it’s mostly hot air. They know their average customers will make every excuse in the world that it’s too difficult to follow through with their anger, march down to the local branch and close their accounts, and go somewhere else. All those auto-pay do-dads will need to be changed, notifying their employer to change the direct deposit of the paycheck, restarting new credit cards and printing new checks, etc. Then there’s the search ahead of time of where to transfer their accounts to where? Another bank? A credit union? It’s all too hard for lazy Americans. So they scream in public, but end up getting slapped with another $60 per year fee.
It’s a business model that’s worked well for the airlines. The banks are now doing it. I’m sure if you look hard enough you will find other business groups having been doing it for a while, too.
Years ago in college we used to show movies to make money. There were studies at the time (no cite) that said people will come see a movie for 25 cents, but if you charge a dollar, you will get even more people to come to that same movie. People have a perception that a wee bit higher price means better quality, when it doesn’t have to be the case. If you tweak that model a bit you can get practically anyone to pay more for the same, or even less quality and service. It’s all about the spin.
BoA knows they will lose some customers because of their new fee. But they also know the perceived lost revenue will be made up in spades by those whose bark is worse than their bite, as well as those who think that debit card fee just might mean better service, even though BoA never said anything about increasing service. Too many dogs automatically salivate now at the ring of the bell, yet never realize their food dish is smaller, or was already taken away.
You don’t have to pay customers to come to you anyone. You can slap them around a bit, and a bit more, and they just stay.
Yup, find a new bank. And this is another recommendation for credit unions - they generally don’t try to find new and better ways to screw over their customers.
There are lots of excellent websites out there which compile lists of no-fee bank accounts, and sometimes also which accounts pay the highest interest, which have the best customer service, which give you the most freebies, which give you the best rate for withdrawals abroad, etc. Find one which covers your financial market. I can heartily recommend the following two, but your use of the dollar sign indicates that they probably won’t help you. I list them here in case other readers with the same problem but in a different market find them of value.
[ul]
[li]MoneySavingExpert.com (for UK banks)[/li][li]Gebührenfreies-Girokonto.de (for German banks)[/li][/ul]
This is not true. My business checking account with Key Bank is free (no minimum balance either). I am a board member in a non-profit that has a free checking account at People’s Bank (no minimum balance, and they even pay interest).
I did a lot of shopping around to find what I wanted. My recommendation for the OP is to just start calling every bank that’s close enough for you to want to use them.
You should never ever do that. You might get into trouble with the Tax people because they don’t want to see private expenses from a business account. The accountants also don’t want it. Maybe you don’t need a full balance sheet each year by an accountant because your business is so small that you can do earnings minus expenses equals income yourself; but you want the business to grow, right? So get into good habits right now.
Yes business accounts cost a fee, while a good bank (at least in Germany, don’t know how competitive the free market in the US is) offers a private account for free under some conditions (each month 1 000 Euros must enter the account for example).
So you should shop around for a bank with good conditions for your private account.
Can you do internet banking? Those are often cheaper because they save on rent and personnel for the branches.
Go to a Credit Union.
They’re great, & I’m never going back to banks if I can help it.
It’s a change in the way businesses think. In my last job, we would gather when product changes were introduced and figure how many customers we’d lose. Then we compared what we’d save by the changes. Then we’d weigh it. If we lost thousands of customers, as long as we made money it was cool.
Business, all of them, have learned to qualifiy their business. It’s not enough to make a profit, you have to make the most profit. Not all customers are good. If it takes ten minutes to serve a customer that makes you a $1.00 and you could serve two customers in ten minutes that make you 75¢, it makes sense to drop that former customer for the latter, IF the former is preventing the latter from coming in.
Think of it like a salesman on commission. They prefer to wait on customers with big ticket items that make them the most commission.
Investors are a lot more fussy too. They expect big returns. They don’t want to buy stock and have it make money at 25¢ a year for a decade. They want some action.
Banking consolidation also hurt a bit. I read Illinois didn’t always allow branch banking. So Savings & Loans became popular in Illinois as they could have branches. Then slowly Illinois did away with not allowing branches.
Fees are something that sneak up on you. I recently lost my job and I cancelled a lot of services and I was surprised at how much I was being nickel and dime’d to death by, not only banks, but everyone. But it’s all too easy to say, “it’s only $5.00, I spend more than that on coffee in a week.”