Sunday, October 23, 2011

Bank customers jumping ship over new account fees

When Heather Kellar learned that Wells Fargo was going to start charging her a $3 monthly fee to use her debit card, she closed her account and found another bank.

Heather Kellar, of North Augusta, switched to First Citizens Banks from Wells Fargo because she didn't want to pay the bank's new debit card fee. The new fee would have cost her $3 a month.

Heather Kellar uses her new debit card from First Citizens Bank to make a purchase at Belk. "The only thing you can talk with is your feet sometimes," she said of switching banks.

“I’ve never had a credit card with an annual fee, so why would I pay $36 a year to use my debit card at someplace other than an ATM?” said the North Augusta resident. “If all the banks do it, I guess I’ll have to. But right now, I don’t have to. People are jumping ship, and then they’re going to realize. The only thing you can talk with is your feet sometimes.”

Throughout the Augusta area, many banking customers are becoming frustrated with fees recently imposed at larger banks, from debit card transaction fees to account maintenance fees. To avoid paying them, some are switching to community banks or credit unions, and these institutions are reaping the benefits.

Georgia Bank & Trust has seen an increase in new checking accounts, said president and CEO Dan Blanton. The bank launched a free checking account with no service charges and free online bill pay one month ago, which has turned out to be a “profitable decision,” he said.

“When something upsets people, such as these fees, they begin to look at services that other banks offer. We’re picking up a nice amount of accounts,” Blanton said.

Only four years old, Savannah River Banking Co. isn’t charging debit card fees because it wants to increase its market share, said CEO Randy Potter.

The strategy is working, and the bank has seen an increase in traffic over the last few weeks, said Aiken market president Joe Lewis. With the standard checking account, customers get free checking if they keep a minimum balance and free services such as access to any ATM worldwide, he said.

F&M Bank in Evans has seen a 10 percent increase in traffic since the beginning of September, said chief financial officer Ed Pope. First Bank of Georgia has also gained new customers by offering free checking with no debit card or ATM fees or balance requirements, said president and CEO Remer Brinson.

The extra banking fees are the result of the Federal Reserve’s price cap rule that became effective Oct. 1, setting a fixed maximum rate that banks with $10 billion or more in assets can charge retailers and merchants to process debit card transactions. To replace the lost revenue, Bank of America, Wells Fargo, SunTrust and Regions Bank recently announced debit card transaction fees for its customers.

Free checking, in general, seems to be a thing of the past. According to Bankrate’s 2011 Checking Account Survey, only 45 percent of non-interest checking accounts are free, down from 76 percent two years ago. Fees for insufficient funds or overdrafts hit a new high for the 13th consecutive year, and ATM fees rose to their highest level for the seventh consecutive year.

However, banks continue to offer free checking if customers meet certain conditions, such as signing up for direct deposit.

“Banking customers in the Augusta and Richmond County and South Carolina MSA have a lot of choice of who they do business with. So, it’s always wise to shop around and find the right place for you,” said David Oliver, a spokesman for the Georgia Bankers Association.

Kellar switched to First Citizens Bank, which offered her a free, high-yield checking account with no minimum balance requirement or monthly maintenance fee. It allows her to earn an interest rate of 1.25 percent if she has certain banking behaviors, such as using her debit card at least 12 times per month.

It took her a month to change everything over because she and her husband had direct deposit and paid their bills online through their debit card, but it was worth it, she said.

Blanton said that he never expected such significant results, though he’s “perturbed at the beating up of the big banks.”

“I guess timing is everything. We didn’t plan the publicity. No one would have known that you would see such bashing of regional banks for the fee, but we knew...these banks had to do something to replace the revenue that legislature took away from them. That’s when we did our analysis and decided that we wanted to offer a totally free account.”

Ted Weatherred, of Augusta, is one of Georgia Bank & Trust’s new customers. He decided to close his account at Wells Fargo when he realized he was being charged a $2 monthly fee to access his account data via Quicken, once a free service.

“I feel certain that more fees were in the works. I had been thinking for some time about switching my business to a more local institution anyway, so I shopped around and found something I was happy with at Georgia Bank & Trust. I’m becoming a bigger fan of local banks and credit unions,” he said.

Credit unions, including Augusta Metro Federal Credit Union, are also benefitting, said Mike Mercer, president and CEO of Georgia Credit Union Affiliates.

“Credit union managers tell us they’ve had people coming in and telling them that they’re upset with the new fees at Bank of America and Wells Fargo, and they’ve had it. They’re especially upset about getting charged for having a debit card,” Mercer said.

Still, many banks are not charging fees, Oliver said. According to a survey by the American Bankers Association, 71 percent of participants did not pay any banking fees during the previous year, he said.

He notes that over the years, bank accounts have not always been free. Online banking used to cost about $10 a month. In the early 2000s, larger financial institutions started offering free online banking, which “put pressure on the rest of the industry to follow suit,” he said.

“As you look at it over a period of time, prices change for a variety of services, and a lot of it depends on the economy, consumer trends, consumer demands and the cost involved with providing particular services,” Oliver said.

Regardless, Joe Ann Guillebeau, of Lincoln County, doesn’t want to pay banking fees. She recently closed her account at SunTrust.

“I got a notice that starting Nov. 1 if you had less than $5,000 in your checking account, they were going to charge you a $14 a month maintenance fee. And if you used your debit card, it was going to be a $5 a month fee. That was going to be over $200 a year in fees. So I went down there and closed both of my accounts that I had and moved them to F&M Bank,” she said.

HOW MUCH DOES YOUR BANK CHARGE FOR A STANDARD PERSONAL CHECKING ACCOUNT?

Source: http://chronicle.augusta.com

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