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US: consumer bank fees set to rise
14 Feb 2012
Experts are predicting that consumers in the
United States will be facing even higher bank fees and tougher
account requirements. In its February 2012 issue, Consumer Reports magazine takes an
in-depth look at the personal finance landscape and gives
consumers the low-down on where to put their money.
Public dissatisfaction with banks in the US has never been higher.
Whether it's the sub-prime lending that tanked the economy and
forced millions into foreclosure, government bailouts or huge
bonuses - the list of complaints is seemingly
endless.
Bank fees - the only way is
up
Under pressure from a still weak economy, interest rates at lows
and a decline in profits from their investment operations, many
large banks are looking to make up the shortfall by hiking up the
fees charged on consumer products and services.
Consumer Reports recently forced Bank of America into a
much-publicised climb down over a proposal to charge consumers a $5
monthly fee for using a debit card. But despite this victory, the
trend for fees is upwards - TD Bank recently began charging $15 for
incoming domestic transfers, for example, and Chase has imposed a
$12 fee for current accounts which had hitherto been free.
On top of fee increases, experts are also predicting that banks
will continue to find new ways to generate more revenue from
consumer banking.
Is bigger always better?
The financial services market has until
now been dominated by 'behemoth' banks, who have unsurprisingly
argued that their size delivers cost savings and efficiency that is
passed on to consumers. But when Consumer Reports looked at the
figures a different story emerged.
In fact, their research found that credit unions tend to have
lower fees than mega-banks. This may largely be because - taking
all expenses into account - it costs a large bank $350-$450 to
maintain a current account, compared to $175-$240 for a community
or co-operative bank.
Consumer Reports advises consumers to check whether their bank
is planning to introduce new fees or tougher account requirements,
and if so to consider their options.
In 2010, the Move Your Money campaign was very successful in
encouraging four million US consumers to switch from 'Wall Street
to Main Street' in protest at the irresponsible behaviour of the
big banks. But the decision need not be purely political or morally
motivated - as Consumer Reports has shown, moving to community
banks also saves consumers money!
Consumer Reports has also produced a helpful
step-by-step guide for consumers wishing to make the leap.
Find out more about bank fees reform
Consumers Union, the advocacy arm of Consumer Reports, has been
at the forefront of civil society efforts to ensure that
consumer-friendly financial reform in the US with its Defend your Dollars
campaign. The organisation has also played a leading role in CI's
global Consumers
for Fair Financial Services campaign.
On 15 March 2012, World Consumer Rights Day, the global consumer
movement will be calling for '
real choice in financial services
'. On the day, CI members in many parts of the world will be
encouraging consumers to hold banks to account and shop around for
a better deal.
Keep an eye on the WCRD Activitiy
Map to see what is being planned in your country.