JP Morgan, you really don't have to prove how terrible you are

[Sibley]

https://www.investing.com/news/stock-market-news/jpmorgan-warns-about-paying-for-checking-accounts-wsj-432SI-3509281

TLDR: Chase is warning that if the law passes to cap fees they'll charge everyone for checking accounts.

Anyway, I'm not paying for a checking account. Huntington Bank is nearish and my parents are there, so that might a good option. Except that I don't really want to see their accounts when I log in to my accounts. There's also a credit union within walking distance, will check them out.

[Morning Glory]

https://en.wikipedia.org/wiki/Hall_Carbine_Affair

Rotten from the start.

[twinstudy]

Free market at work I guess, if you don't like it then vote with your feet and move to a fee-free institution.

I've never had an issue with banks charging account fees, penalty fees or extremely high interest rates on late payments. There is ALWAYS a way to avoid fees if you are a preferred customer, so all those fees do one of two things:

1. They either subsidise those of us who have good credit; or

2. They lead to banking profits = shareholder returns.

As long as all payments and fees are transparent, I have no issue with it.

[Ron Scott]

The Consumer Financial Protection Bureau is proposing an $8 cap on credit-card late payment fees and a $3 cap for overdrafting bank accounts?

I hope they place a $2 cap on adding fries to my burger order, and maybe cap gas at $3 a gallon?

Who needs the Fed when you can beat inflation like this?

[wageslave23]

I also think the free market should decide fees. It's one of the few areas in life where people still feel the actual consequences of their own irresponsibility. 

[flyingaway]

Chase free checking account? You have to have a lot of conditions met and they almost don't pay your interests.

[Sibley]

Well, I am going to vote with my feet. I'm going to switch to the local credit union, will stop by later today. I know Chase is shitty and has been forever, but I guess this hit my annoyance point of no return. I do not and am not willing to maintain the kinds of balances at Chase that would exempt you from their fees. The main bank for me is checking and a small savings account, the rest of the money is at another bank. So if they're going to stop letting direct deposit exempt you from account fees, that would expose me. And I'd rather deal with the hassle now than later in the year.

[lifeisshort123]

The idea that checking accounts would not be free I am skeptical consumers would embrace... Anytime we have had a bank that required a minimum fee to have that account open, we have moved our money elsewhere.

[roomtempmayo]

The WSJ ran a story yesterday that basically called their bluff and concluded that they've made similar threats before and never followed through.

[seattlecyclone]

Makes total sense that if one of their revenue sources is banned they'll try and make up for it elsewhere. I certainly benefit from the low fees and credit card points subsidized by people too poor or irresponsible to avoid the occasional overdraft or interest payment. I can't honestly say it would be a bad thing overall to charge everyone a small monthly fee so that these things that are currently penalized heavily were handled with a bit more grace.

[Ron Scott]

I think those of you who vote with your feet are doing the job. Thats how capitalism and a free-market economy works best. Having the government get involved can sometimes help when necessary, but they often muck things up. Setting fees on specific services in this case just sounds like electioneering, bad economics, and poor government.

[twinstudy]

I think those of you who vote with your feet are doing the job. Thats how capitalism and a free-market economy works best. Having the government get involved can sometimes help when necessary, but they often muck things up. Setting fees on specific services in this case just sounds like electioneering, bad economics, and poor government.

You Americans have no idea how good you have it. Here in Australia bank fees (and everything else) are highly regulated; penalty/late fees are almost non-existent, and the max credit card rate you can charge is in the low 20s (unless you're a dodgy business like a payday lender), and almost everyone gets the same credit card rate.

Upshot is - no one gets stung with fees, but we also have awful incentive/points schemes, because there's no profit in it for the banks.

Government regulation ends up levelling the playing field meaning that good choices and personal responsibility are completely otiose.

To give another example - healthcare is free for those earning under $90k, but those earning over $90k here are forced to take out private health insurance, to subsidise and pay into the system for others. So not only is your health insurance rate not dependent on your medical history (no discounts for healthy habits), but you also get penalised for earning more by being required to take out insurance that you may well not want (as a healthy person, I would rather just rely on the free public system, but I can't choose to do that).

[Sibley]

The WSJ ran a story yesterday that basically called their bluff and concluded that they've made similar threats before and never followed through.

Yeah, they might well be bluffing. But I am tired of it. If they want to be cartoon villains, I am opting out.

[crocheted_stache]

Slapping someone with a $135 overdraft fee when they're already bottomed out financially is crappy, and it's a crappy way to prop up profits and subsidize free (or "free") service for better-off customers who can meet minimum balances and deposits. 

Charging everybody (or everybody who cannot meet assorted requirements in the fine print) is crappy, and making threats like that to resist/delay/prevent legislation they don't like is crappy. I hope banks that make that move find quickly that it costs them business. Faced with a monthly fee, I'd certainly consolidate into the least costly option.

Both categories of bank fees contribute to some people remaining unbanked and distrustful of the banking system.

I'm not convinced legislating away the overdraft fees is going to fix much of anything, however, when the larger problem is poverty and income inequality and a profit motive that too often rewards squeezing customers over serving them. I'm not saying we shouldn't try it or that I have a better idea, just that it is barely scratching the surface.

And @twinstudy , I'd gladly give up or scale back my credit card rewards if it meant credit card companies weren't generating them by charging what amounts to a 2-3% private tax (merchant fees) on basically everything everyone buys. If I had some kind of simulator where I could tinker with the setup and see the result without harming anyone, one of the first experiments I'd try is to reduce merchant fees to the cost of doing business, or adding them explicitly to only the bills of those paying with a credit card that charged them.

[twinstudy]

Simple solution - don't go into overdraft.

By all means, banks should NOT be able to hide terms and conditions in fine print, nor allow for labyrinthine requirements to avoid fees. Fees should be upfront and transparent. Once that's done, any further issues are the borrower's problem.

[Ron Scott]

I think those of you who vote with your feet are doing the job. Thats how capitalism and a free-market economy works best. Having the government get involved can sometimes help when necessary, but they often muck things up. Setting fees on specific services in this case just sounds like electioneering, bad economics, and poor government.

You Americans have no idea how good you have it. Here in Australia bank fees (and everything else) are highly regulated; penalty/late fees are almost non-existent, and the max credit card rate you can charge is in the low 20s (unless you're a dodgy business like a payday lender), and almost everyone gets the same credit card rate.

Upshot is - no one gets stung with fees, but we also have awful incentive/points schemes, because there's no profit in it for the banks.

Government regulation ends up levelling the playing field meaning that good choices and personal responsibility are completely otiose.

To give another example - healthcare is free for those earning under $90k, but those earning over $90k here are forced to take out private health insurance, to subsidise and pay into the system for others. So not only is your health insurance rate not dependent on your medical history (no discounts for healthy habits), but you also get penalised for earning more by being required to take out insurance that you may well not want (as a healthy person, I would rather just rely on the free public system, but I can't choose to do that).

I find it amazing that so many people in America continue to argue that government intervention is the right medicine for what’s ails society and that our corporations are somehow enemies that need to be punished. That naïveté is mind blowing.

Given the state of political life in America, we’d be dead without our corporations and our military. Our elected officials are spoiled partisan incompetents that couldn’t run a modern business if their lives depended on it. They do not deserve us, or the achievements of those who really deliver for us.

[FireLane]

Slapping someone with a $135 overdraft fee when they're already bottomed out financially is crappy, and it's a crappy way to prop up profits and subsidize free (or "free") service for better-off customers who can meet minimum balances and deposits. 

I agree with this. It's one of the many reasons it's expensive to be poor - the overdraft fees, check-cashing fees, low-account-balance fees, higher interest rates, credit checks for jobs, and other hurdles poor people face that don't affect the wealthy.

An even nastier example is debit resequencing. If you send a payment and make a deposit to cover it on the same day, some banks will rearrange the order of those transactions to cause the payment to bounce, so they can charge another overdraft fee.

I like free checking, of course. But I don't want or need to benefit at the expense of people who are worse off than me. Everyone who posts here should be rich enough to be above such petty grasping for tiny advantages.

And @twinstudy , I'd gladly give up or scale back my credit card rewards if it meant credit card companies weren't generating them by charging what amounts to a 2-3% private tax (merchant fees) on basically everything everyone buys. If I had some kind of simulator where I could tinker with the setup and see the result without harming anyone, one of the first experiments I'd try is to reduce merchant fees to the cost of doing business, or adding them explicitly to only the bills of those paying with a credit card that charged them.

I like this idea. It's a silly arms race where the credit card companies charge higher fees to merchants, but also increase rewards to make those cards more appealing to use. But since merchants have to raise their prices to compensate, I don't end up any better off for using the card. At best, it's a wash.

The only worthwhile part of credit cards is the fraud protection. And we wouldn't need that either, if banks and credit bureaus didn't make identity theft such a ridiculously easy crime to commit!

[Loren Ver]

We left our big name bank* and changed to a credit union years ago when they kept yanking our chain.  There is a point when enough is enough.  I like our credit union.  They do all the normal things we need and they don't do all the annoying bank things.  I haven't had a single benefit cut since joining over a decade ago.  I think the minimum I need to have a savings in $5 and there is no direct deposit requirement (good because I am FIREd now).  I even get free checks, yes I still write a few checks a year.  They are also very friendly and I can talk to a manager when I need to, which was a struggle at the bank since they shared one between branches so you had to guess which one s/he would be at on any given day. 

I don't think I should be charged to use my own money.  If that means I don't get some flashy extra points or percents of benefits that's fine.  I want ACCESS to MY money without them charging me money.

Good luck Sibley!

*we still have our USAA bank, but they have no local branches and don't play the stupid games most banks seem to play. 

[Sibley]

Opening bank accounts is much easier if you are smart enough to do so when you can actually get into the branch. Which I am not. I have accounts set up, but they're not fully setup. I'll go in Saturday and finish everything, then after that can update everything that is linked to the checking account. So far however, my impression is they're good. Not their fault I'm dumb.

I expect to close my Chase accounts by the end of July.

[Fi(re) on the Farm]

Simple solution - don't go into overdraft.

By all means, banks should NOT be able to hide terms and conditions in fine print, nor allow for labyrinthine requirements to avoid fees. Fees should be upfront and transparent. Once that's done, any further issues are the borrower's problem.

I agree that you shouldn't overdraft your accounts but the current system of deducting the largest withdrawal first on any given day and then charging an overdraft fee on every other transaction that day is unscrupulous and dishonest. If I were to make ten transactions and all of the first 9 were covered by what was in my account and the last, which was largest, wiped me out I should not have to pay overdraft fees on the first 9 transactions.

[twinstudy]

Yes, I agree with that. Overdraft fees should be calculated on a reasonable basis rather than deliberately lined up to punish a consumer.

[rantk81]

The answer for me is really simple.  Fidelity "Cash Management Account".  It is a brokerage account at Fidelity that "acts" like a checking account.
- No fees
- You can choose to have your balance automatically swept into FDIC insured savings accounts (around 2.5% right now) or into SPAXX money market fund (around 5% right now)
- You get a debit card.  It reimburses ATM fees everywhere
- You can write checks, and they give you free checks to use, if you need them
- You get an account number and a routing number for the account, so you can do "normal banking things" with it
- Instant transfers between my other fidelity accounts
- App lets you deposit checks

The only thing it can't do (that I care about), is Zelle.  So I keep an Ally checking account separately for that, on the rare occasion I need to use Zelle.

[crocheted_stache]

I just found my credit union's overdraft options. They are as follows:

Overdraft Protection Link to Another Deposit Account you have at [...] Credit Union
No fee per transfer (but you need to opt in first)

Overdraft Protection Line of Credit
Subject to interest (also need to opt in/set up ahead of time)

Courtesy Pay Privilege
$29 Overdraft Fee per item

Obviously, options 2 and 3 aren't ideal, but if it's going to happen, they seem like a reasonable approach to discouraging abuse and recovering costs, and less like a money-grab that's going to make it even harder for someone who's struggling to get back above water. They're also very up-front about this policy, and they send a relatively easy to understand notice every so often.

Their checking is free, no minimum balance. There's a $2 monthly fee only if you want a paper statement. Human help is available and, in my experience, actually helpful.

[crocheted_stache]

Simple solution - don't go into overdraft.

May you never find yourself in a position where it is no longer so simple.

[Ron Scott]

The answer for me is really simple.  Fidelity "Cash Management Account".  It is a brokerage account at Fidelity that "acts" like a checking account.
- No fees
- You can choose to have your balance automatically swept into FDIC insured savings accounts (around 2.5% right now) or into SPAXX money market fund (around 5% right now)
- You get a debit card.  It reimburses ATM fees everywhere
- You can write checks, and they give you free checks to use, if you need them
- You get an account number and a routing number for the account, so you can do "normal banking things" with it
- Instant transfers between my other fidelity accounts
- App lets you deposit checks

The only thing it can't do (that I care about), is Zelle.  So I keep an Ally checking account separately for that, on the rare occasion I need to use Zelle.

I hope Vanguard gets their plan to snuff like this.

[Morning Glory]

Some of the better banking options like credit unions or Fidelity aren't available to people who are struggling or just starting out because they run credit checks on potential account holders and exclude based on score. Again, not a problem for people on this forum but it does sound out of touch to suggest 'switch to a credit union' to people whose credit may have been damaged by these fees.

[crocheted_stache]

Some of the better banking options like credit unions or Fidelity aren't available to people who are struggling or just starting out because they run credit checks on potential account holders and exclude based on score. Again, not a problem for people on this forum but it does sound out of touch to suggest 'switch to a credit union' to people whose credit may have been damaged by these fees.

Yep. I listed my credit union's overdraft stuff because I happened to find it again, and it's one example of a reasonable approach and fee schedule. To my knowledge, the credit union is not struggling due to their relatively low overdraft fees. It gives the lie to JP Morgan's "don't touch my overdraft fees or we'll have to charge everybody monthly!"

I once watched that same credit union turn away someone I knew. That person was young and his employment was intermittent. He'd had an account at one of the big four. He'd run out of money and gotten hit with their punitive overdraft fees. Without an income or much of anything else to do about it, he walked away.

When the credit union checked on him*, he still owed Big Four Bank a few hundred bucks, which had been accumulating interest and penalties while it sat there unpaid. The jobs he got after that, he ended up scrounging around for ways to cash the checks rather than depositing them. That was years ago. He's had some work off and on since, but he ever really got on his feet. (I suspect he struggled with ADD and possibly depression, not that I'm at all qualified to identify things like that. He also had little to no contact with his divorced parents as a young 20-something and didn't quite have the wherewithal or the support to recover from that rough start.) 

This is just one way someone has ended up "unbanked" and how just avoiding overdrafts isn't so simple. I'm sure there are millions of variations.

If a monthly fee does ever become the norm, those with the freedom and means to do so will optimize. Those who are stuck will end up paying or abandoning banks.



*In the US, banks don't run your credit score, exactly. There's a similar-but-different report for banks, maintained by an entity called ChexSystems. Like a credit report, you can ask for your own record, review it for accuracy, and put a freeze on it if you wish. Most people here don't need to do that unless something goes wrong, such as identity theft or major errors.