Hate Your Bank? It Could Be Your Fault

My 21 year-old cousin signed up for the National Guard recently. He leaves for basic training in a few weeks, where I’m guessing he’ll be tortured with physical activity, then emerge a “real man” by the time he graduates in June. While I think this is a great idea for him, I overlooked one caveat - someone has to take care of his bills while he’s gone. And I’m sure you can guess who got nominated.

Yesterday we went to his bank to add me as a joint account holder. I was interested to visit the branch since I’ve heard him complain over and over about excessive fees. His income is beyond adequate and he’s not an outrageous spender (especially considering his age), so I’ve never been able to figure out why a simple checking account has cost him so much money.

At the Bank

After a short wait, we sat across from an “Account Professional” while she typed furiously at her computer. Several minutes passed, then she frowned and looked up at my cousin.

“Would you like me to just close out this savings account?” she asked.

He looked puzzled. “Why? What’s wrong?”

“Well, you’ve been under the minimum balance for quite some time and the account is overdrawn by about $400. The minimum balance requirement is waived for military personnel, so I can just take the charges off and close the account for you.”

Cousin nodded and she resumed typing. He leaned over and whispered angrily, “That account had $1400 in it the last time I checked.”

“Then how did it get to negative $400?”

“The minimum is $1500. I thought I put more money in it but I guess I forgot. That was a long time ago.” He shrugged.

By the time we left the bank, I learned some additional facts about my cousin’s banking habits:

  • For the life of the account, he has been charged $3.95 a month for a rewards debit card that he has never even owned. He noticed the charge on his statement but assumed it was just “some random bank charge” and never questioned it.
  • He has been locked out of online banking for about 8 months because he entered the wrong password too many times. Until yesterday, he just assumed he couldn’t use online banking anymore.
  • He didn’t set up online bill pay “because it looked too complicated.” He has paid hundreds of dollars in late fees because his work schedule makes it difficult to pay bills in person, and he can’t use checks because he never ordered any.
  • Since he couldn’t access his information online, he has been paying a $10 fee each month to make his truck payment by phone. He never knew he could pay through the lender’s website instead of the bank.
  • He lost his PIN, so he has just guesstimated his balance for the past 18 months or so. Leading to over $2000 in overdraft fees in 2011.

Needless to say, the ride home was rather unpleasant for my cousin. He may never speak to me again after the lecture I gave him, and I think I’m okay with that.

Your Banking Rights and Responsibilities

According to the FDIC and the FTC, consumers have numerous rights when dealing with financial institutions. When you open a checking or savings account, you have the right to know the terms of the account, such as what fees you could pay and what events might trigger those fees. You have the right to receive a copy of the fee schedule written in plain English, as well as an accurate explanation of how your deposits are credited.

However, as the saying goes, with great power comes great responsibility. No regulatory agency gives you the right to just do whatever you want and expect the bank to fix it.

It’s your responsibility to understand your account. Your bank will provide a fee schedule and disclosures about your account, but you actually have to read that information. If you choose to throw it away, that’s not the bank’s problem.

It’s your responsibility to contact the bank when there’s a problem. Banks have thousands of customers. Believe it or not, no one sits around monitoring your account 24/7. If you notice something weird and choose not to pick up the phone, you will probably never get a resolution.

It’s your responsibility to know with your balance. For everyone, but especially for those of us who live on the edge, it’s ESSENTIAL to know your bank balance, as well as what purchases are outstanding. Seeing the numbers might scare you, but you can’t stick your head in the sand - guessing only results in overdraft fees.

It’s your responsibility to keep up with documentation. When you get bank statements or those little envelopes with your PIN (don’t you hate those perforated edges?), don’t burn them or throw them away. Don’t shove them in the junk drawer or put them in the shredder. Take 3 minutes to make a file folder called “[Bank] Checking Account” and keep everything in one place.

It’s your responsibility to ask for help. If you’re paying bank fees left and right like my cousin, there is a problem. Sometimes your income is too low or your bills are too high. More often, though, there is a breakdown in the way you are spending and/or keeping track of your balance. Banks LOVE fees - a teller will never call you and say, “Gee, you’re overdrawing a lot. We’d love to help you stop handing us money!”

You Don’t Have to Hate Your Bank

At the height of my spending addiction, I cursed my bank on a daily basis. Damn their overdraft fees! Damn them for making my available balance so inaccurate! Damn them for bouncing all the checks I wrote before crediting my deposit! (Actually I still think that one is pretty crappy.)

After awhile, I had to admit that maybe the bank wasn’t the problem. Just like my cousin did yesterday (with a little encouragement). No matter how much it sucked to admit it, I was the common denominator in every single one of my banking issues. Once I figured that out, I was able to find a bank that met my needs and I’m proud to report that I haven’t paid a single fee in 14 months.

Yesterday, I learned that you don’t have to have a spending problem to waste hundreds of dollars on bank fees. Instead, you can choose to remain ignorant about the basics of your account. Or, for those of you who are tired of fighting and stressing and paying fees, you take the reins and do something about it.

Where do you bank? What do you love (or hate) about it? Have you ever blamed the bank for something you knew was really your fault?

  • http://www.20sfinances.com 20sFinances

    I just don’t know what to say - you’ve said it all. I couldn’t agree more and I’m still in awe that someone could lose $1400 in fees. Sad…

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      I know. I want to say, “Well, he’s just 21 years old,” but I can’t even make myself buy that. After that experience, I am THRILLED that he joined the Guard - hopefully he’ll come home a responsible human being.

  • http://www.moneybeagle.com/ Money Beagle

    Oh wow that’s utterly amazing. I check my bank balance at least five times a week. I hope he learns discipline that extends into other areas for his sake moving forward.

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      Agreed! He’s too smart to act so dumb - I can’t wait to see what 16 weeks of training does for him.

  • http://everythingfinanceblog.com Tushar Mathur

    Wow! So there are people in this world who don’t use Online Bill Pay and check their account balances every day? Shocking..

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      I can’t imagine - I am a compulsive balance checker. And my only regret about billpay is not using it sooner.

  • http://pulse.yahoo.com/_NNQTITGQC3L7GHWAKXTTBRIDVA Rachel

    Actually if he had $1400 in there and the account was $400 overdrawn wouldn’t that be $1800 in fees? Is my math off cuz that is crazy?

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      Nope, you’re right! The total of all the fees is somewhere in the neighborhood of $4k. I can’t imagine losing that kind of money in a year!

  • http://add-vodka.com/ Daisy

    I bank at TD Canada trust and while they are typically pretty good as far as banks go, they do some dumb things. Their customer service is usually lacking - as in when I call in to find something out I’m on hold for half an hour and transferred to 10 different people.
    I check my account balance almost constantly - it’s probably unhealthy. I can’t fathom how anyone could NOT

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      I’m the same way. I check mine all the time, even multiple times in the same day. I am obsessed with knowing how much money I have.

  • http://www.moneyspruce.com/ Jeffrey Trull

    I have to admit, I have mixed feelings on this. The banks could do more to help people that are getting slammed by fees, but, for obvious reasons, they don’t want to do that. I understand that your cousin should’ve taken more responsibility, but I think it’s absurd that it’s even possible that he could lose so much money in fees for a bank account.

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      I’m with you - you’d think someone would have said, “Okay, this guy has no clue what’s going on. We should reach out to him.” I think it’s sad that customers are such easy targets for banks. Then again, how can you not notice when thousands of dollars are missing?!?!

  • http://bogofdebt.wordpress.com/ Bogofdebt

    Ouch, I thought I was bad at banking. Okay I am-but I fixed that or at least, am in the process of fixing it. But yeah, I agree-I would have been wondering about that little fee or online banking fiasco.

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      I’ll be the first to admit that I HATE calling businesses. But when it comes to my money, I won’t hesitate to pick up the phone and find out what’s going on. Computer systems make mistakes, and it’s up to us to make sure any fees are justified (even if we don’t like them).

  • http://onefamilyoneincome.blogspot.com/ OneFamily

    You are so right on this. It’s most people’s own fault for poorly managing their money. I think your cousin is a textbook example of what not to do! I hope you were able to talk some sense into him. My 20 yr old son is not the greatest with his money but he at least does go online almost daily to check his balance and keep on top of it.

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      We’re going to work on it. I think once everything is set up, including bill pay, he’ll be able to keep up with it a little better. Now that I’m on the account, I can check on it every week and make sure he’s paying attention.

  • http://www.moneyaftergraduation.com/ Bridget

    Wow! I probably check my bank accounts every few days, I can’t imagine going months without knowing the balances.

    Good thing your cousin has you helping him now lol

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      No joke! I kind of dread it because I know it’ll take awhile to get everything straightened out. That said, once it’s fixed, he has no excuses.

  • http://www.myyearwithoutwastingmoney.com/ Ella

    Wow that was heavy fees! Here in Norway nobody pays bills in person anymore. Everybody uses online banking. I couldn’t imagine not being able to access my balance 24/7!

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      I couldn’t tell you the last time I paid a bill in person. The only pill I can’t pay online is my water bill, but my bank prints a check and mails it to them. All of my bills are automatic and I love it!

  • http://twitter.com/MoneyTrail MoneyTrail.net

    Whew…glad I wasn’t in the car on that ride home. I’ll bet he definitely got an earful, and rightfully so. I’m going to print out your list of responsibilities with a bank account and show them to my older kids today!

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      Hopefully your kids NEVER end up in this situation. Thank goodness my cousin has the income to bounce back from this, but most people his age don’t. It just hurts me on his behalf - he’s like my second child, and I can’t believe he let this happen.

  • http://www.earnsavelive.com/ Earn Save Live

    Andrea, I was cringing as I read this - your cousin has donated so much money to that bank! Their fees (and his inability to assume responsibility for his finances) are astounding.

    I’m glad that you gave him a lecture, because he needed to hear that. Maybe it would help to add up everything that he’s spent in fees at that bank - it must be nearly $4000 or more - and show him what he could do with that money if he invested it today and got 5% interest for 30 years. A lot of times, when people see a visual representation of compound interest, they have an “A ha!” moment.

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      That’s a good idea. He’s gathering up his bills now so we can go over what he owes, when it’s due, and how to pay it, so I’ll get an investment calculator together to show him when he gets here.

  • Catseye

    I’m speechless! Or nearly speechless, otherwise I wouldn’t be writing this. All I can say is thank goodness he’s got you, Andrea!

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      Well, I can only do so much. The real test will be when he’s back from basic and I turn the account back over to him. Hopefully he’ll be ready to make some changes!

  • http://www.broketo.ca Melissa

    I don’t know if I’ve ever blamed the bank for my own stupidly, but I’ve definitely requested that fees be reversed, even if they were incurred through my own stupidity, because I feel like the fees re pretty excessive in general (and from what I understand, Canadian banking fees are nothing compared to the randomness in the States!). Like, for instance, I once bounced a cheque and got hit with a $35 NSF charge. It was just a fluke thing, in which I thought I’d transfered money from savings to chequing to cover it, but I guess I didn’t. I basically just went to my bank, admitted I was an idiot, but pled student poverty and they reversed it for me. I’ve done this a few times (though I try to never do it for the same mistake twice).

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      I remember my first checking account - the bank used to call me if I was going to overdraft, giving me a chance to make a deposit before any fees hit. (This was a tiny local bank.) After awhile, though, they stopped calling because I was bouncing checks left and right. If you don’t abuse it and just make a mistake now and then, it’s very true that most banks will work with you.

  • Anonymous

    Wow! That’s amazing (not in a good way) that he had no clue. The thing of it is, the banks don’t have to time (I’m sure) to reach out to every individual customer who has a dwindling balance. We blame the banks for the mortgage crisis. We blame the banks for this or that. At some point, people have to accept responsibility for their own actions. What’s worse is the folks who go into a place of business and demand that they get some special treatment for an oversight on their part. If the business is willing to waive the fee/ make an exception, then so be it, but it should be a choice and not a requirement. Holy cow!

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      That’s a really good point - I know people who will go into a business and act like idiots, insisting that a charge be removed or serviced turned back on. When they’re at fault the entire time, it just makes them look dumb! I’m so polite it hurts sometimes, even when I’m frustrated. Seems to get far better results. And sometimes just being willing to say, “Look, I screwed up, but I’d like another chance,” is enough to get what you’re asking for.

  • http://moneycactus.com Shaun @ Money Cactus

    No excuses really, but banks are pretty devious. Check often and shop around, banks always play to win!

  • http://cashflowmantra.com/ Cash Flow Mantra

    I think you are going to be a good influence on your cousin. If he is smart, he will listen to what you have to say.

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