I recently returned from vacation to find two baffling letters from my bank, which I’ll call Goliath Global Bank. For reasons the bank chose not to disclose, I was informed that it was converting my savings and checking accounts in ways where I’d now be subject to steep monthly fees. Applying a little arithmetic, they tallied up to $504 in annual fees.
The interest that both accounts had been paying was paltry to say the least — between 0.01 percent and 0.05 percent annually. That translated to a few bucks a year and made parking my money at Goliath Global Bank only slightly superior to sticking it in my mattress. You don’t need to be a financial adviser, like I am, to recognize that paying $504 to make a few bucks isn’t a good deal for the consumer.
The bank said I could avoid these fees with the new accounts as long as the total of my balances never dipped below $28,500. But taking money out of my Treasury Money Market Fund yielding about 2.3 percent to maintain the minimum balance made even less sense. It would end up costing me about $670 a year.
‘You Do Not Need to Take Any Action’
To receive this opportunity to pay hundreds of dollars a year, both letters assured me that all I needed to do was nothing. “You do not need to take any action — your account will convert automatically,” one letter said. Goliath Global Bank was cunning; it harnessed the power of inertia, the most powerful force in the universe.
Admittedly my own inertia had kept me at Goliath Global Bank for years. Even after the time came for my son to set up his finances for college and the bank encouraged him not to pay his credit card balance off monthly. And even though, despite my 19-year track record at Goliath Global Bank, it put long holds on checks, costing me a couple hundred dollars in lost interest that could have been earned elsewhere.
Taking Goliath Global Bank’s direction to do nothing was not an option. So, I called the 800-number listed on the letters. It got me nowhere.
I called and emailed one banker; the lack of response got me nowhere.
I walked over to my branch in search of some face-to-face interaction. The banker I met there was unaware of the letters, since they’d apparently been sent by corporate in another state. So I sent a copy over. I finally spoke with the original banker I first contacted who told me to call the same 800-number that had got me nowhere. Clearly, the time had come to part ways with Goliath Global Bank.
Breaking Up With Your Bank Is Hard to Do
It had been 20 years since I switched banks. The last time I did it meant only opening an account, ordering checks and learning where the new ATMs were. Now, I have to take other things into account, such as:
- Direct deposits
- Automatic bill payments
- Recurring transfers
- Linked accounts, like PayPal
- Banking alerts via email or text
- Learning the new mobile app
Changing banks’ remorse was quickly setting in.
I had vociferously made my dissatisfaction known to Goliath Global Bank and, in what I assume was a response, heard from an empathetic manager of another branch. She offered a simple solution that could have been offered at the beginning: just change my accounts from interest-bearing and I’d need only a $3,000 minimum combined, costing me just a few bucks a year.
However, I had already made a commitment to a new bank and the process had begun. So, I bid Goliath Global Bank a not-so-fond farewell.
After I was assigned this story, I contacted Goliath Global Bank’s media relations department and asked why the bank didn’t just put me in the lower minimum account? I acknowledged that I realized doing so would be better for me but less profitable for the bank. I also asked PR to confirm that the letters introducing the new fees came from corporate.
They declined to answer my questions, citing “privacy” and “confidentiality,” a patently absurd position since they could certainly disclose information to me about my own account!
My Advice to You
After living through this ordeal, I have some advice about evaluating your relationship with your bank. Consider the following:
- Fees are a big profit center, so watch out. Read all communications from your bank, whether by snail mail, email or text.
- Check your statements every month. Look hard for fees, especially new ones. They may be hidden or in small print.
- Large balances earning lower than money-market fund rates are the equivalent of paying hidden fees. Online banks often offer higher rates on checking and savings than brick-and-mortar ones.
- You can try challenging your bank on fees. See if it will reverse fees and explore options for having no- or low fees. It never hurts to ask!
- If you’re constantly butting heads with your bank for information or services you’re entitled to receive, it’s time to break up. My banker termed my frustration with the situation as “combative.” I admit that by the time we finally spoke I probably was.
- You might want to phase out your bank. It may take weeks to set everything up with a new one, so don’t be in a rush to pull all your money out of your current bank. Ultimately, Goliath Global Bank was very helpful in advising me on transitioning out.
- Pick your new financial institution carefully. Credit Unions can be good alternatives to banks. But don’t assume that just because they’re owned by the members that they always put members first. Wherever you’re looking, study the fees they’ll charge you and rates they will pay. Look at what others are saying. Sites like DepositAccounts and Nerdwallet rate banks, or let users do so.
- Be prepared to spend time making a switch. Doing it wrong can be costly. For instance, if you pay bills automatically from your bank account and close that account before setting up auto-pay at the new institution, you might wind up with a late payment. That can then stick you with a late fee and ding your credit score.
While I belong to three credit unions where I have CDs, I ultimately decided to go with another big bank, though smaller than Goliath Global Bank. The needs of my financial-planning business require a more national presence as well as some occasional local services such as signature guarantees.
So far, the new bank relationship is good — although we’re in the honeymoon period. Global Goliath Bank once bent over backwards to help me as well. Perhaps the bank did so believing it would wind up getting my investment account and the ability to charge high fees.
This time, though, I made my intentions clear — just a few checking accounts — not a larger commitment. I’ll see how things go.
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