There’s nothing worse than getting punished for doing the right thing. And that’s just what happened to a mom and her 18-year-old son when he opened a checking account at a local bank in McCullom Lake, Ill. His mom encouraged him to open the bank account as a way to teach him how to handle a bank account. And that’s when the trouble began.
After moving some money from checking to savings, Daniel Ganziano's checking account balance fell to $4.85. Because of the low balance, the bank levied a $9.95 maintenance fee. The fee overdrew the account by $5.10, which triggered another fee of $28 that the bank charged daily. In just two weeks, the fees totaled $229.
This story, reported by the Chicago Tribune, is yet another example of banking fees gone wild. There are, however, a few simple steps you can take to eliminate banking fees once and for all.
1. Don’t assume small banks have small fees: With the Occupy Wall Street movement, there has been a big push to move from big banks to small, community banks. While smaller banks may be a great option for some, don’t assume they are free. Small banks, including credit unions, charge fees, too. And in some cases, they may not be the best option. Nothing replaces researching banks and making the best decision for your financial needs.
2. Go online: Some of the best banking options come from online financial institutions. Because online banks don’t have the cost of building out a network of physical branches, they often charge less in fees and pay higher interest rates.
3. Watch minimum balance requirements: It’s not uncommon for a bank to waive a monthly maintenance fee, but often you must maintain a minimum balance. It’s important to understand the terms of the maintenance fee before opening an account. And if a minimum balance is required to waive the fee, make sure you meet this requirement.
4. Monitor your account: There are a lot of good reasons to monitor your bank account. Of course, one of the most important reasons is to watch for unauthorized transactions. But keeping a close eye on your account will also help you spot bank fees that can sneak up on us. Because bank fees tend to multiply quickly if the account is overdrawn, addressing the issue as soon as possible is paramount.
5. Your bank may not be best for your children: Accounts designed for children often pose special problems when it comes to fees. Because most children do not keep a lot of money in an account, fees can quickly erode what little money they have. As a result, a parent’s bank may not be the best option for children. I’ve found that the best bank accounts for children are often online banks with no fees.
If you are wondering what happened to the bank fees charged to Daniel Ganziano, the bank eventually waived them. But it took the involvement of Jon Yates (he writes the "What's Your Problem" column for the Chicago Tribune) before the bank would budge.