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Tired of bank fees? Brace yourself, spreads dead
Contributed by: Leigh Baran on 1/26/2008

Guide to getting bank overdrafts reversed...and other notorious fine print fees.

I worked in banking for five years 10 months-served as a Branch Manager for four years, a co-manager for four months, and a banker for one year three months. One of my dreaded tasks, each and every day, happened to be refunding fees. I hated giving back the Bank's profit-especially when clients neglected their fiduciary responsibilities and acted unfiscally.

If there is a sob story, I've heard it-any excuse in the book as to why a client failed to balance their account properly. Of course, those in banking have heard for years the infamous general statement-If I didn't have any money, then why do I still have checks? Or the latest with the popularized debit card, why did the bank allow the transaction to process? I just assumed I had funds because my card went through.

I wasn't born yesterday, despite my youthful appearance-In the back of everyone's mind, we keep a running total of our money, and we know if we're cutting it close. Unless of course, you're one of the privileged members of society with bottomless checking account dollars.

Married couples had the funniest excuses-neither bothered to communicate spending joint funds, and expected the bank to act as a therapist/accountant. Ironically, the majority of the retail bankers today can't even explain the simple arithmetic behind a balanced checking account statement and have troubles interpreting simple math to irate customers. A vicious cycle littered with blase attitudes-not my problem, bank's problem. They make billions of dollars every quarter-what's giving back a few people $33? If I can't figure it out, then the customer must be right!

It didn't help the major news channels broadcasted a piece on "increasing Bank fees" back in 2004 and how many of the major players charged for every service imaginable, including 24 hour customer service, use of debit cards, and speaking with a teller.

The banks realized way before the subprime meltdown, they needed to find a new way to generate the bottom line. Enter fee-based income to the market mix. Not only do fees act as recurring sources of income, but banks count on 5% their client base to overdraw their accounts every month. Studies also showed those with overdraft protection or ready reserves, had a tendency to actually pay more (through interest) than those without. The psychological affect of having a line of credit backing up your finances allowed clients do, well, what they do best, spend without remorse.

Then there's the area of convenience-clients benefit through time savings and impulse buys through merchant services, card processing, financial planning, and internet banking-all methods to grow residual fee income. 44% of our bank's profits happened to result from retail services, quite a large piece of the pie compared to the peer group, yet a decline from the 59% it used to generate back in 2003. Fee based services and products went from a mere 16% to 36% during the same period. The banks knew the housing bubble would pop-they just didn't know when.

I often wondered the exact dollar amount a client with a debit card added to fee income versus a client who primarily used checks. The average consumer checking account for my former bank generated $500 of income per annum, while the average business checking account added $3000. In addition, Free Checking without a minimum balance is truly remarkable marketing, allowing clients to walk the fine line.

SO now, you as the retail bank customer, how can you avoid the sting of overdraft fees, additional fees, and fees you have no clue about but appear on your statement? Short of switching banks, many customers follow the myth their relationship and time with a bank matter. To some extent, it does, and at my former company, we actually had a system for tracking our customer relationships, called RMS, or the Relationship Management System. This database tracked everything-your account activity, which in turn measured client's behavior, average deposit balances, balance trend, how often your overdrew your account, how often you had fees refunded, the list goes on-very similar to our Grocer "Value Cards" aka Safeway Club, Sooper Card. Based on your score, you could potentially get better rates on credit cards, have a lower credit score to qualify for loans, and a set amount of the dollars we're willing to refund appear along with your account history to every retail employee.

On a sidenote, we use the Patriot Act as an excuse to not accept expired or invalid ID's.. That's an argument I had with bankers regularly-USE COMMON SENSE-you're protecting the person in front of you! What makes SENSE!!!

However, if you've had a checking account for 20 years with an average balance of $500, banks like you, but the cost of sending a statement, servicing your account, and additional overhead, usually exceeds the income gained from your relationship.

With those thoughts expressed, yes, I'm validating what we've all known for years-the amount of money you make and keep at your financial institution determines the amount of fees you get back. If you're what banks consider "affluent" they're willing to address your wire transfer fee or the foreign ATM fees we've all grumbled about. Often, the foreign ATM's are owned by another individual or institution and the fees go to the cost of servicing the machine, loading it with with cash. Yes, it costs to have cash on hand, the US treasury/mint don't work for free.

So what happens if you live paycheck to paycheck, work hard, and make a mistake? Generally, first time offenders can negotiate their fees, as long as they take ownership of their mistake. Don't give your bank the run-around. Every story is a wonderfully crafted piece that may provide material for aspiring writers, but the easiest way to reduce your chances, is spouting off a sordid tale of irresponsible behavior. Even extenuating circumstances-my mom died, my dog died, I got in a car accident, has nothing to do with your frivolous spending habits, and if they do, you should be thankful we accepted your transaction and saved you the embarrassment of an ATM or credit card decline. You borrow the bank's money, they charge you a fee, pure and simple, no hidden agenda, and you won't have to worry about ruined relationships with friends or family due to financial issues.

I always enjoyed a logical, rational argument-especially when people were upset about how we processed items. No, banks do not hold items until your account reaches a low point, then decide to push them through-that's an argument I heard often- Why do you pay the larger items, then the smaller items? If you paid the smaller items first, I would have received only one overdraft for the large item. Premeditated bank fanangling will not create empathy. Sure, I understand the bank's reasoning seems a bit far-fetched-we pay the larger items because we assume they are more important to go through on your account than the smaller items, usually a mortgage, car payment, etc. I always thought that trained line's a bunch of bull-if we're paying all the items, then we would have paid the larger item in each scenario. The real answer is the computer software is not smart enough-although the banks can force-pay items based on your past account history or your relationship with a manager.

Finally, the easiest way to get fees refunded, is game the system. With branches on every street corner, some just 10 blocks from each other, you'll find many of the larger banks have employees that could go either way with regards to refunding your bank fees. If you fail at one location, try another. Chances are, they're competing with that other branch down the street and want to earn your loyalty through throwing you a bone.

Find a good banker or manager to deal with on a regular basis, someone who understands how their bank works, pro-actively addresses with you potential fee issues, and educates you on how to properly use the services your bank offers. A smaller institution is more likely to have personalized service although the trade-off is usually convenience, cost, and product variety.

If you want good employees to stay at your bank-be nice to them. Don't yell about your money problems or accuse them of your irresponsibility. Bankers that care are few and far between, but dealing with yelling every day on top of sales pressure, corporate policies, and the customer behind you, creates a feeling of helplessness. We fuel anger in each other, and fuel compassion, but remember no one is obligated to understand YOU.

During this time, I've reflected that perhaps returning that $33 helped shape a community more than lending a million dollar loan-it gave an individual hope, a feeling of good will often lost in today's profit race. However, if giving away the bank is the solution, then what kinds of lessons are we teaching today's generation? You truly do get what you pay for.


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CONTRIBUTOR INFORMATION

Leigh Baran

Denver , CO

Leigh Baran has posted 37 stories and 6 comments since joining on 11/16/2007. Leigh Baran 's average story rating is 4.58.
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