Planning can curb costs of banking
By CRYSTAL LINDELL - clindell@nwherald.com
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| Polo Fabian (left), a bilingual counselor, helps co-worker Jane Gerloff with client information Monday at Consumer Credit Counseling Service in Woodstock. (Lauren M. Anderson – landerson@nwherald.com) |
When Curt Shortridge noticed he was close to overdrawing his bank account, he did what he thought was the responsible thing – he called the bank.
“She told me, ‘You have $500 overdraft protection,’ ” the McHenry resident said. “I’m like, ‘OK, it’ll be fine.’ ”
Then, 31 transactions later, he had accumulated more than $800 in fees. Shortridge said he didn’t realize he’d be charged $28 for each purchase requiring an overdraft.
“I was paying for a vitamin water that’s maybe $2 ... and I would get charged $28, so I was paying $30 for vitamin water,” he said. “I can only say that it’s wrong.”
From checking account fees to ATM charges, consumers such as Shortridge are paying thousands of dollars a year to have bank accounts.
The average overdraft fee is $28.95, while the average ATM surcharge is $1.97, according to a 2008 study from Bankrate.com, an aggregator of financial rate information.
The overdraft fee is up from $21.57 in 1998, while the ATM surcharge is up from 89 cents in that year.
And the ATM fees alone provide banks with more than $2 billion every year, according to Bankrate.
“Maybe I’m wrong, but I thought banks were supposed to make money by helping people get car loans and stuff, I didn’t think they were supposed to make money off ... fees,” Shortridge said.
Danielle Pease, a Johnsburg resident, said she’s seen ATM charges as high as $8 a transaction.
“I don’t ever go to any other bank’s ATM for that reason,” she said. “It’s crazy.”
Polo Fabian, a certified credit counselor with Consumer Credit Counseling Service of McHenry County, said he usually goes over bank fees when working with new clients.
“If you have a habit of doing those, in the long run you’re paying a lot of money,” he said. “It might be just $10 bucks a month, but that’s $120 a year and times five years, that’s a lot of money.”
For some clients he even recommends asking banks not to allow any overdrafts.
“It’s just basically throwing that money away,” Fabian said.
As for ATM fees, consumers usually can get cash back free at the store to avoid the charge, he said.
Debbie Jemison, spokeswoman for the Illinois Bankers Association, said that the fees are needed, and amenities such as ATMs provide great service to consumers.
“You can get cash out 24/7 anywhere in the world,” she said.
Of consumers who pay bank fees, about 65 percent pay $3 or less per month, she added.
“When you compare that to like cable service, what a bargain,” she said.
As for overdraft fees, she said 80 percent of consumers did not pay one in the last year, and of those who did, 85 percent said they were glad that the payment was covered.
“It saves the consumer the embarrassment,” Jemison said.
She said the fees are in response to the banks incurring costs to cover the overdraft.
Jemison added that the services should be reserved for emergency use only.
“It’s much like a spare tire, you wouldn’t drive across the country on a spare tire,” she said.
As for Shortridge, he said he was able to talk to a staff member at the bank – where personnel did not return calls for comment on this story – and work out canceling 14 of the fees. But that still means he’ll have to pay 17 of them.
He said he now plans to switch banks.
“I’m not trying to do this to debunk the bank or ... to go against the corporate world,” he said. “But it just puts a bad taste in your mouth.”
