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Are you part of the 99%?

No, this post isn’t a political diatribe about the pros or cons of the Occupy Wall Street movement. The movement Paper Doll cares about is the desirable movement of clutter out of your spaces and the unwanted movement of money out of your bank accounts. If you’re like most people, maybe even up to 99% of people, chances are good that your bank account is being eaten up by fees. That’s definitely not the way to keep your finances organized!

You see, recent consumer legislation, like the CARD Act and the Dodds-Frank Wall Street Reform and Consumer Protection Act, was designed to keep credit card companies and banks from levying huge, hidden and unfair fees. In the abstract, this was a good thing.

SWIPING AT CONSUMERS

One provision of the Dodds-Frank Act was the Durbin Amendment, which required reduction of the “swipe fee” that banks charge merchants when customers use their debit cards to make purchases. The average fee had been 44 cents per transaction; effective October 1, the maximum fee for merchants is now 21 cents. Merchants’ fees to banks (set by Visa and MasterCard) had exceeded the actual cost of processing a credit card transaction by a whopping 400%.

This provision is expected to cost the banking industry more than $6 billion annually. However, although the legislation limits how much merchants can be charged, it doesn’t say anything at all about what consumers can be charged.

If you tell the banks, “Hey, you can’t surreptitiously and confusingly sneak hard-earned money from the accounts of your customers [per the CARD Act]!” the banks will not say, “Oh, gee, sorry.” They’ll say, “Okeydokey, we’ll levy other fees and make them more visible.” Transparency is great. More fees? Not so much.

So, the banking industry, led by Bank of America, started finding loopholes and inventing new fees, including a $5 charge to consumers in any month in which they use their debit cards for purchases. (Using debit cards at ATMs would not incur any fees.) SunTrust also added the $5 fee, while Regions Bank had added a $4/month fee, and Wells Fargo and JP Morgan Chase had been conducting state-by-state tests of $3/month fees. Banking industry experts imagined that there might be some push-back on these fees, but seemed to anticipate that consumers would just turn to their credit cards for a larger percentage of their purchases, which in many cases would also mean more money in banks’ pockets.

FEE-A-PALOOZA!

It’s not just swipe fees.

Just two years ago, almost 80% of non-interest bearing checking accounts were free; today, slightly less than half are free. For some accounts, Bank of America is charging close to $9/month if account holders make deposits or withdrawals inside the bank at a teller counter. PNC charges upwards of $3 to call a representative and request a transfer of funds.

More banks are also charging for paper statements. Granted, going paperless is better for the environment, and by lowering paper and mailing costs, it’s better for your bank’s bottom line (though you can be sure the savings won’t be passed along to the consumer).

But there are problems with paperless statements. For example, if you leave your bank for another, you will no longer have access to your closed account’s history. Even if you stay with your bank, some institutions will only let you access statements for a limited period of time, anywhere from six to eighteen months. While, in most cases, that’s satisfactory, if your personal or professional situation requires that you maintain bank records longer, you’ll have to print your own statement copies.

Do you send a little money to Grandma in the old country or your college kid doing a semester abroad? Wells Fargo has just raised its foreign money transfer fee by 125%, from $20 per transfer to $45!

And then there are increasing fees for not maintaining a minimum balance, for over-drafting an account, for using a non-network ATM, for calling to ask a question about your account, for counting and depositing coins, and for monthly service fees for the great and exulted honor of holding an account at the bank.

BACKLASH AND BACKPEDALING

It’s only been a month since Bank of America’s announcement of monthly swipe fees, but response was swift, widespread and loud. From late-night comics to water cooler chat to, yes, the Occupy Wall Street people, the distaste for fees to access one’s own money has been palpable. Consumers are outraged.

But what a difference a day makes!

Just since Friday, some banks have done a Netflix-like mea culpa and reversed themselves. For example, JP Morgan Chase and Wells Fargo have announced they will no longer test or apply their swipe fees. In the time I’ve been writing this very post, SunTrust, which had been quietly charging some customers the $5/month fee since June, announced it would eliminate the fee as of November 2, and would refund any fees customers had been charged.

The cheese stands alone.

As of this writing, Bank of America, which had drawn much of the public ire, is now the only bank not to have reversed its swipe fees. However, representatives of the bank announced Friday that they will not apply the fee to customers who have a monthly direct deposit into their accounts. This is comforting news to employees and anyone receiving direct deposit of a government check, like Social Security. For self-employed individuals (like Paper Doll) and others who do not receive direct deposit, this is no boon.

Of course, this backpedaling comes as a result of the backlash over the swipe fee, but multiple other fees remain in place.

THE MOVEMENT

The Move Your Money Project is one of many non-profit movements encouraging consumers to limit the power of large financial institutions and help support a “more sane, stable and localized” banking system. Consumer’s Union, publisher of Consumer Reports, operates the DefendYourDollars.org website to encourage activism by way of an online, personalized, letter-writing protest campaign.

Bank Transfer Day, set for November 5, is a grassroots initiative. The goal is two-fold, to lessen the bite big banks are taking out of your bank accounts and to communicate dissatisfaction with the onslaught of fees, which many see as corporate greed at a time when so many Americans are struggling financially. It requires no letter writing campaigns, no demonstrating in the streets, and no ability to write a protest sign with proper spelling and grammar.

Bank Transfer Day espouses one simple act. Take your money out of a bank that charges you fees that you find unreasonable, and move to an account at a more acceptable financial institution.

It’s not entirely painless if you’ve got a busy schedule, and you won’t be able to move all your money and actually close your old account until all of your checks have cleared and you’ve changed your automatic transfers and payments. But it will ensure that you get to keep more of your money.

Saturday is the big day, but consumers have already started an exodus from big banks and towards alternatives, like credit unions. Indeed, over the weekend, various media outlets reported that credit unions, on the whole, are seeing a 30% uptick in applications, and some credit unions have doubled their membership ranks in just the last five weeks.

HOW TO MOVE YOUR MONEY

1) Evaluate your situation. Go to your bank’s website and review the schedule of fees. Is it acceptable to you? Are the fees onerous? What is the fee system likely to cost you over the course of a year? For example, a $5/month swipe fee means $60 each year.

2) Identify your needs. Carefully consider what features you need in a financial institution:

• An interest-bearing account?
• A traditional brick-and-mortar bank or an internet-based bank?
• Free email or text alerts regarding account activity?
• Lots of local ATMS?
• Free or refunded out-of-network ATM withdrawals?
• Free or discounted printing of checks and deposit slips?

3) Research alternatives. Before you consider closing your “big bank” account, find the right solution for your needs. To start, take a look at:

Find A Better Bank lets you input the features you’re seeking in a bank and offers you a sortable list of those that meet your criteria.

BankRate has an excellent, searchable database of financial institutions, though it provides fewer search options than Find A Better Bank.

Once you have a few contenders, be sure to request a copy of their schedules of fees or search for them online. Also, make sure that any alternative you consider is FDIC-insured.

Realize that you have multiple alternatives to big banks:

Credit Unions are not designed to make a profit, so they are generally able to offer low-fee and no-fee accounts. While there are still restrictions on eligibility, these restrictions have generally been loosened in recent years. For example, Affinity Plus Credit Union, behind the pithy Ditch Your Bank campaign, opens membership to almost all Minnesota residents.

Find A Credit Union can help you locate credit unions near you in the United States. In Canada, use Credit Union Central of Canada.

Online banks are great because they tend to have very few fees, and those they do have are low. They’re able to do this because they don’t have to pay for the upkeep on physical buildings or employees to staff them. However, it can be inconvenient to deposit checks or make withdrawals via non-online transfers. In addition, speed can be a factor. With ING, for example, it usually takes two days to transfer funds to a non-ING account.

Community banks are small, local or regional banks. Because they lack the heavy infrastructure, mammoth advertising budgets and multi-million dollar golden parachutes for their executives, they can afford to be more customer-centered, charge lower fees and deliver a more personal level of service.

(Note: Paper Doll does not endorse any specific financial institution.)

4) Make lists. Figure out whom you’ll need to contact to change information and keep your finances organized and running smoothly. Include the following:

• Direct Deposits — your employer, federal and state government agencies, trusts, etc. [Call 800-772-1213 to change Social Security direct deposit account information.]
• Automatic Payments (and the dates for which they are set) — mortgage payments, monthly bills, credit card payments, etc.
• Automatic Transfers (and the dates for which they are set)
• Pre-scheduled payments and/or transfers

5) Open your new account with a small deposit and sign up for online bill-pay services.

6) Transfer some funds from the old account to the new one. Be sure to keep enough money in the old account to cover payments, transfers and fees so that you do not overdraw your account or dip below a required minimum balance.

7) Notify all parties associated with your lists from step #3 regarding your new routing and account numbers. Verify the accuracy of all the data you provide.

8) Watch your accounts carefully. Check off all transactions through the old account and keep an eye on your new account’s online dashboard to make sure your transactions are being properly processed.

9) Close your old account only when you are certain everything is now being processed through the new one. Be sure to get written confirmation that your account has been closed.

Organizing involves active decision-making. When you cede those decisions to others, particularly to institutions that don’t have your financial interests at heart, you don’t just lose control. You lose money. Organize your financial accounts so that they serve your needs. “Occupy” a position of leadership over your own money!