Sometimes numbers do tell the story — just not the story you want.
The American Bankers Association last week touted its latest survey of consumers who were “asked how much they estimate they spend on fees for banking services each month such as checking account maintenance and ATM access.” Here’s what the ABA reported:
- 53 percent said they pay nothing;
- 14 percent said $3 or less;
- 9 percent said $4 to $6;
- 5 percent said $7 to $9; and
- 14 percent said they pay $10 or more.
Naturally, the ABA touted the 53%.
“Consumers should know that bank accounts cost little or nothing for most people,” said Nessa Feddis, ABA vice president, senior federal counsel and retail banking expert. “And people who keep their money in a bank can feel comfortable knowing that it’s insured, can’t get stolen or destroyed, and is available to them 24 hours a day, seven days a week, through multiple convenience channels,” she added.
But wait one second here. By my math 53 + 14 + 9 + 5 + 14 = 95. And, in fact, 5% of the respondents had no idea how much they paid per month.
To me, that’s the news here.
It would be interesting to get the perspective of vendors to banks that provide programs to convince prospects to open checking accounts at a bank by using “free checking” as the lure. While it has been years since I looked at the programs, most of them touted and delivered on promises to significantly increase fee income through the checking product.
So we have a dichotomy. If the ABA is truthful, then there is a “Free Lunch” at most banks. However, the ABA can tell the truth and still be “dishonest” because honesty requires being truthful, non-deceptive in the the telling of the truth, and have candor.
Let me see –
!) Debit cards have interchange which means that a customer is paying 1-2% per purchase more than would be necessary if there were no merchant charges.
2) Check re-order fees – how much overcharge for that service?
3) Foreign exchange use at ATM’s for a fee anywher?
4) Need a cashier check? You almost always need a checking account and the bank gets the float on the check plus often a fee for the check.
5) Overdraft fees – what percent of customers get one or more of those a year?
6) Incoming wire transfers- a fee to get money deposited into your free checking.
7) Paper statement fee?
8) Fee for return of the actual check?
I could go on and on but my point is that the banking industry needs to regain trust and being not honest is a poor way to start. While bank de-regulation should have received a newspaper headline “Banking De-Regulated and Rich will get richer and Poor will get poorer”, even the Rich are paying some of these “hidden fees” for their checking account.
Perhaps the ABA would like to discuss fee income from checking accounts in a more honest fashion.