Tips for seniors on how to avoid costly bank fees

Feb 28, 2012, 8:25 a.m.

New banking legislation, designed to "protect" consumers, has fueled a surge in bank fees. This has also spurred new thoughts on how to avoid bank charges. While important to everyone, tips on how to avoid bank fees is particularly significant to seniors.

Two legislative measures have generated "new and improved" bank fees. The CARD Act (2009) and new Federal Reserve laws (2010) changed the landscape of banking. These laws forced banks and credit card issuers to create new charges or resurrect former fees to replace lost income.

How to Avoid Bank Charges

Learning how to avoid bank fees demands that seniors understand the charges they hope to bypass. Have you ever read a credit card or bank account agreement? If you are a practicing lawyer, the language may be "comforting." However, should the rest of the senior population read these agreements, the language just generates migraine headaches. For example, a study by the Pew Charitable Trusts discovered that disclosure documents were typically over 100 (yes, 100) pages long. Advocacy groups are pressuring the Consumer Financial Protection Bureau (an oxymoron perhaps?) to demand that banks create a one-page schedule of fees.

Second, search for those banks offering free checking accounts or special accounts for seniors, without monthly maintenance fees. For example, avoiding bank fees for Massachusetts seniors is easy for those 65 or older. State-chartered banks MUST offer free personal checking and savings accounts to seniors. In other states, there are still banks that offer free checking and savings accounts to seniors. Do not be shy. If your bank does not have senior "specials," ask for fee waivers. You might offer to have your salary or Social Security payments direct deposited in return for a waiver of charges. This is an effective plan on how to avoid bank fees.

It's also important to remember that avoiding bank charges does not depend on years of loyalty . For instance, you are a loyal customer of 15 years, but your checking account seldom had a balance over $100. Your bank has probably "lost" money on your account for all those years. Why would they agree to lose even more? However, offering to open additional accounts, e.g., savings, CD, auto loan, etc., might convince them to waive some fees.

Consider changing to a non-interest bearing checking account. Sound like a crazy idea about how to avoid bank charges? Consider this. Unless you keep high balances in your checking account, you may earn a few dollars' interest each month, but it may now cost you $5 to $15 dollars in monthly fees. However, non-interest checking accounts may still come with no or very low fees.

Consider joining a credit union in your area, as they charge lower fees than large banks. Member (depositor) owned, credit unions offer the same personal banking services at lower cost with fewer fees than most major banks. Use your "seniority" to your advantage to save money.

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