savings

10 things your banker won't tell you

Just how upfront with you is the banking representative who helps you open an account? Chances are he or she tells you about the various products and services the bank offers. You may even receive a list of fees or be directed to the bank's Web site to see the list. We thought we'd fill you in on things you won't be told, but you might find out over time.

1. "Our tellers get a fee for steering you toward our investment products."

Tellers and other bank employees get a "referral fee" for sending customers over to the investment side of the bank -- the area that sells products that aren't FDIC insured. Employees who sell nondeposit products receive a commission when they make a sale, but they're not supposed to make unsuitable recommendations. If the product is, for example, a mutual fund and one fund company pays a higher commission than another, the employee is not supposed to know that.

2. "We pay customers a miniscule amount of interest on savings and money market accounts to boost our profit margin as much as possible."

There's no doubt about it; banks are not nonprofit institutions. They're in business to make money. But, come on. FDIC-insured banks made $90 billion profit in the first three quarters of 2003. While consumers are earning on average 0.5 percent or less on savings and money market accounts -- not even keeping up with inflation -- banks are charging, on average, better than 7 percent for home equity and 48-month new-car loans.

3. "As long as there's no fraud involved, we really don't mind when customers bounce checks."

Fees are big business for banks, and punitive fees such as nonsufficient funds fees rake in the big bucks. Some institutions charge $12 if you bounce a check -- a bit of a sting but a good reminder not to let your account run down. But the average fee is around $26, and some banks will soak you for $35. You can get overdraft protection -- your check will be paid and that lets you dodge the bounced-check fee the retailer, utility, etc., might have imposed -- but you'll likely still have to reimburse your bank and pay its bounced-check fee.

4. "Wow, our savings accounts can be really expensive!"

Some banks aren't happy just with having you open and stock a savings account; they want to modify your behavior. Federal Reserve regulations limit to six per month or statement cycle the number of electronic transactions in certain deposit accounts, but some banks go far beyond the regulation, turning it into a source of fee income by charging for "excessive withdrawals." While the Fed doesn't stipulate a fee, we found banks charging anywhere from $1 to $10 per "excessive withdrawal," and some set the trigger point for that fee as low as two withdrawals a month. Teller and ATM transactions are not included in the regulation. Some banks charge $10 to replace a lost passbook, and some tightwads charge for deposit and withdrawal slips.

5. "Our fees will eat up the $50 balance in your child's savings account in about five months."

Make sure your bank has a kid-friendly savings account before the little one deposits his or her money or you'll end up with a broke, sobbing child. Monthly service fees demolish low balances pretty darn quick. The best children's accounts have no balance minimums, no fees and they pay interest on any balance. If none of the banks in your area offers such an account, look for a bank that offers a free savings account -- no minimum balance and no fees, but you might not get interest unless there's a significant balance.

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