You can still find
if you search and end bad ATM habits
recently released Bankrate.com Checking Account Pricing Study starkly
points out that checking is getting more expensive. Fees are escalating;
yields declining. With balance requirements, service charges, and
ATM fees all trending higher, having a free checking account with
free withdrawals may seem like a thing of the past.
But by zeroing in on no-cost checking accounts
and adjusting a few habits, consumers can eliminate fees and maximize
returns on their dollars.
Avoiding ATM fees
ATM fees can turn a "free" checking account into a high-cost proposition
in a hurry. To avoid them:
- Manage how often, and where, you make ATM
withdrawals. One way to cut down on ATM fees is to cut down on
the withdrawals that cost you. Using your own institution's ATM,
even if it isn't the most conveniently located, eliminates the
surcharges and "foreign" fees that squeeze consumers. The inconvenience
of going out of your way to use a free ATM is mitigated with fewer
trips to the ATM. For example, if your account only permits four
free withdrawals per month, then manage how many withdrawals you
make so as not to exceed that allotment.
- Use the point-of-sale terminals located in
supermarkets and convenience stores as a pseudo-ATM. Opting for
cash back when making a purchase with your debit card or an ATM
card that has such capability, is tantamount to a free withdrawal.
In Bankrate's study, 83 percent of institutions do not charge
a fee for point-of-sale withdrawals. This strategy is particularly
suited for smaller ATM withdrawals because the ATM fees otherwise
incurred compose a larger percentage of the withdrawal. If you
have to pay $3 for a $20 ATM withdrawal, that's 15 percent of
your total. But $3 is only 3 percent of a $100 withdrawal. The
key is to center the point-of-sale usage around intended purchases,
as buying $1 or $2 of unnecessary merchandise just to use point-of-sale
doesn't save any money.
Free checking lives!
Free checking still lives, although it takes more effort to
find than in years past. In fact, nearly all of the 35 markets in
the survey had at least one free account among the 10 largest institutions
surveyed. Such accounts are more commonly found at smaller local
and regional institutions, credit unions and Internet banks.
By finding a free account that requires no minimum
balance, regardless of whether the account pays interest, consumers
can most efficiently use their dollars.
Maintaining a balance of $2,200 at a yield of
1 percent just to avoid the monthly service fee does not qualify
as efficient. The checking account is a transaction account. Treat
it like a gas tank -- when it gets closer to empty, fill it up --
with your paycheck.
Keep only the money needed until the next payday,
plus a buffer. With bounced-check fees averaging nearly $24, the
cost of hitting empty is higher than ever.
Divert any excess funds to a more efficient
use, whether that is investing, parking it in a high-yielding
money market account, or paying ahead on credit card balances
or other consumer debt. Instead of earning a yield of 1 percent,
or paying excessive monthly fees, knocking out credit card debt
costing 18 percent provides a much higher return to the consumer.
The analysis presented here is based on national
economic data and the proprietary Bankrate.com National Index. Since
1982, Bankrate.com and its predecessor, Bank Rate Monitor, have
been surveying financial institutions and gathering rate information
about mortgages, credit cards, CDs, checking accounts and other
financial products. The Bankrate.com National Index is protected
under copyright. Media outlets seeking additional data or commentary,
please contact Greg
--Posted: Oct. 6, 2000