Many people know the frustration of mistakenly overdrawing their checking account by $1 or $2 only to be charged a $35 overdraft fee by the bank. And, those who have not made that mistake probably know someone who has. It's difficult not to mourn the partial tank of gas that overdraft fee would have paid for or the bag of groceries that could have been purchased.
As the weak economy continues to drag on, banks however appear to be offsetting loan- and investment-related losses by increasing various fees. All over the country, fees to maintain checking accounts or use out-of-network ATM machines are skyrocketing. Information from the independent bank monitoring Web site, Bankrate.com indicates overdrafts fees average nearly $29 per check nationwide, and as high as $37 to $40 at some banks.
While these practices are legal, banks with particularly outrageous charges are beginning to draw scrutiny. According to a recent article in the Washington Post, the puzzling practice of some banks who allow customers to overdraw their debit cards and then hit them with exorbitant overdraft charges is causing the Federal Reserve to consider more strict regulation.
Meanwhile, hometown banks frequently offer very attractive rate structures and warrant a closer look when shopping for a financial institution.
Jonathan Fox, Fowler State Bank, believes their fees are probably among the lowest in the country. Currently the bank charges $14.50 for an overdraft. However, Fox says all banks will probably have to consider raising fees to help offset increased expenses in the overall costs of operations including increased government regulations and FDIC insurance premiums.
Fox explains the FDIC is presently insuring deposits up to $250,000 for each depositor which in turn increases the assessments charged to each insured bank. The FDIC is entirely funded from each individual bank's assessment and so presents a real cost to the protected institution.
“Fowler State Bank works hard to keep fees below the competition yet still offer the same modern services that 'big banks' offer,” states Fox.
Fees at First National Bank in Fowler also remain lower than average. Currently an overdraft charge of $27 is assessed if the check is paid, or $25 if the check is returned.
The bottom line for consumers is to exercise vigilance over financial matters. Accounts should be carefully monitored to avoid overdrafts. One small mistake left unnoticed can easily snowball resulting in hundreds of dollars paid in fees. Most financial institutions now offer the convenience of online or telebank account access, making it easy to keep on track of transactions. It is also important to be familiar with a bank's rate structure and to plan financial transactions accordingly.
