Why Do Some Bank Accounts Have Transfer Fees and Some Don’t?

Has this ever happened to you: You check your bank account and find there’s a LOT of money missing. Upon further investigation you come to find your hard earned money has found it’s way into the banks’ coffers in the form of overdraft and transfer fees! The same institution that claims to protect your money is taking their cut at every possible turn.

Banks earn a profit by keeping the difference between the interest rate they charge for loans and the interest rates they pay out to their account holders. Since banks are in the business of making money, they will often charge excessive fees for over drafting an account, transferring money from one account to another, or even for just maintaining a checking account.

Given banks charge interest rates of 3-4% on loans and only offer at best a 1% return on checking and savings accounts, they’re already making a significant profit. Banks that charge account fees are simply taking advantage of their customers.

Bank of America has recently rolled out a new account structure with equally new fees. You can take on a basic electronic banking-only account for $9 a month, or pay up to $25 for an account with lots of extras. At the time of this writing, Chase bank charges a $12-per-month “maintenance fee” for most checking accounts. Citi Bank and Wells Fargo also have account fees from $8 up to $30 a month for individual customers. You may find your local credit union charges no fees.

So why do some bank accounts have transfer fees and some don’t? Banks have started to charge hefty overdraft and transfer fees because they realized they could make money on people’s failures. If you fail to budget properly one month (let’s face it, it happens to all of us), and have to overdraft your account, the bank can make a profit off of your mistake. Now, that’s some way to reward customer loyalty…

When you are faced with a large overdraft or transfer fee, you are not helpless. The phrase “The customer is always right” applies to banks too. With a little persistence, and a willingness to walk away, you can overcome expensive bank fees.

When you’re slapped with an unfair fee, dispute it. Always. If you’re assertive and threaten to take your business elsewhere, you’ll usually find that representatives will waive the fee. If they say they can’t, they’re lying.

Of course, in order for this to be effective, you have to be willing to make good on your bluff. Be prepared to walk away. In fact, if you take the time to look, you may find a better no-fee banks out there with fairly little trouble. In fact, 80% of credit unions don’t charge checking account fees. Shop around and find a bank you can trust and will put the customer first.

Banks have gotten too greedy, and as evidenced by the various “Occupy” movements, people do not, and should not, have to put up with it. It’s time that we send a message to the big banks. We can vote with our dollars for honest community banks and credit unions that truly have our best interests in mind.