money by saving money at the bank or credit union is
ridiculously tough when consumers are battling super-low
rates on savings and sky-high banking fees.
anyone can do is shop for higher, promotional savings
and CD rates — and keep a close eye on some tricky
practices and fees. Here are some suggestions:
Try to avoid rising overdraft fees
you’re regularly pulling out a debit card, pay
attention here as it can be amazingly easy to get
smacked with a string of high overdraft fees.
we’re not expecting any regulatory relief ahead.
in May, the Consumer Financial Protection Bureau
essentially kicked aside plans to overhaul rules
relating to overdraft fees.
to the frustration of consumer watchdogs, acting
Consumer Financial Protection Bureau Director Mick
Mulvaney is moving in a vastly different direction than
his predecessor Richard Cordray, now the Democratic
candidate for governor in Ohio.
had fought hard for years against any further crackdown
on overdraft rules. For now, they’ve won with the
latest delay out of the CFPB.
sent a pretty clear signal that this isn’t a priority
for them," said Debbie Goldstein, executive vice
president at the Center for Responsible Lending.
federal regulations that went into place in 2010, banks
cannot charge overdraft fees for debit card purchases
and ATM withdrawals without a consumer’s earlier
consent or without what’s known as an
reality, consumers find "opt-in" rules
confusing, particularly when they’re opening up a new
account. Many times, Cordray had argued, consumers weren’t
fully informed about the risks of running up high fees
by opting in for overdraft coverage involving debit
cards and ATMs.
use debit cards for convenience and pull out the plastic
to cover everyday purchases instead of using cash.
risk of triggering costly overdraft fees goes up,
though, when consumers who don’t maintain a large
cash-cushion buy coffee or lunch during the day without
realizing that their paycheck hasn’t cleared their
checking account yet.
students and others on tight budgets can be particularly
vulnerable to getting caught in this trap.
you "opt-in," you allow your bank to cover an
overdraft when you’re running short of money and using
your debit card. But opting in means you would trigger
fees to cover that overdraft.
avoid such fees, consumers can consider opting out of
overdraft protection on debit card and ATM transactions.
If you opt out, your card would be declined at the
register when you don’t have enough money in your
account to cover the purchase.
times, consumers might even have that $5 or $10 in cash
in their wallets if the plastic is denied, so they can
still buy what they want with cash, Goldsten said.
they don’t have cash on hand, she said, they might
happily decide to skip the coffee that day in order to
avoid a $35 overdraft fee.
fees cost consumers an estimated $14 billion a year,
according to consumer watchdogs. Often, consumers are
charged several fees, which average $35 each, within a
short time period, according to research by the Center
for Responsible Lending.
not out of the question for some consumers to be hit
with cumulative fees adding up to hundreds of dollars.
9 percent of checking accounts are held by consumers who
are viewed as "frequent overdrafters" —
those who attempt to overdraw their accounts more than
10 times in a 12-month period, according to report
issued in 2017 by the federal watchdog agency.
they incur a lot of fees, the bank may choose to close
their account," Goldstein said.
those consumers can end up on checking account
blacklists that make re-entry into the banking
mainstream very difficult. They may end up using even
higher cost alternatives, such as check-cashing services
or payday loans.
average, overdraft fees at credit unions hit a record
high of $28.20 a pop, according to a Bankrate.com
survey. That compares with an average overdraft fee of
$33.28, according to an earlier Bankrate.com survey.
should you do? Plenty of consumers are able to keep a
closer eye on their money by using text alerts for their
bank accounts. Consumers should also be cautious about
how they use their accounts, as they might not realize
that banks can have some different policies for how they
process some transactions.
Use rising interest rates to your advantage
next Federal Reserve policy meeting is scheduled for
June 12 and June 13. Many economists expect another
quarter-point hike then, too.
starting to see some banks advertise rates at 2.75
percent and higher for 5-year CDs; and promotional rates
of 2.35 percent were available in May for one-year
certificates of deposit.
are rising and investors are warming to cash in an
environment where stock market volatility has picked
up," said Greg McBride, chief financial analyst for
expect to see continued increases in CD yields and more
general, consumers should compare offers at online
banks, community banks and credit unions, too, along
with larger banks.
every bank is boosting yields, and the biggest banks are
typically paying the lowest returns," McBride said.
average yield on a one-year CD is 0.59 percent,
according to Bankrate.com. That compared with 0.43
percent at the beginning of the year and 0.35 percent a
average on a five-year CD is 1.23 percent now, according
to Bankrate.com. That compares with 1.01 percent at
beginning of the year and 0.91 percent a year ago.
noted that top-yielding, online savings accounts are
offering rates of nearly 2 percent and may be a good
option for emergency funds. The online banks are
nationally available, federally-insured and many have no
minimum deposit. About half of the top accounts have no
minimum deposit or minimum deposits of $100 or less.
Look for free checking at a credit union
best bet for snagging a checking account that doesn’t
rack up one monthly service fee after another is likely
a credit union, according to a survey by Bankrate.com.
82 percent of the largest credit unions nationwide offer
free checking accounts to all members — a stark
contrast to only 38 percent of banks, according to the
free checking account can be defined as an account that
has no fees regardless of your balance.
is especially important for those living
paycheck-to-paycheck because every dollar counts and
they cannot afford to see hard-earned money needlessly
siphoned out of their accounts each month," McBride
free checking can be a big boost to the bottom line for
millennials and others without a set 40-hour schedule.
Not having to maintain a set balance in a checking
account each month can help people who face
unpredictable cash flow because their hours or money
earned from commissions vary each month.
money by ditching a regular monthly charge you can
easily avoid makes sense for everyone, of course.
times, consumers can get free checking if they agree to
a direct deposit of a paycheck or regular monthly check.
four out of 50 credit unions surveyed — or 8 percent
— required customers to maintain a minimum balance
each month to avoid a fee, according to Bankrate.com.
you pick the wrong account, you could be stuck paying
$10 or $12 a month for checking. Some credit unions have
lower monthly fees of $5 or lower.