I was in Washington Mutual the other day, and noticed that they were promoting the features of their “Free Checking” account. Very prominently on the poster was this offer:
One free waiver of an Overdraft/Non-Sufficient Funds fee per year
I looked at their ad and thought, what a strange offer! Why would they want to offer that? Isn’t that highlighting an experience that makes people feel bad (bouncing a check) and reminding them of it?
Then I remembered that Washington Mutual took the lead in raising bounced check fees. Why are they offering one free bounced check (NSF fee) per year? Because that would appeal to people who bounce checks! And those people are more likely to generate fee revenue for Washington Mutual than others. If you have trouble with bounced checks, don’t look for one free bounced check; if this is a concern for you, you probably have more than one fee per year to deal with. Look for the lowest bounced check fee in your area. According to Bankrate, the lowest NSF fee from a traditional bank in San Francisco is $19 per incident from Bank of America or Comerica, and Comerica looks lower on other fees, like ATM fees. Washington Mutual is $6 higher per incident. If you bounce five checks in a year, Comerica would save you $5 total versus Washington Mutual, even after Washington Mutual’s “free” offer.
No company will give you anything for free unless they think that will lead to getting more money from you later. Whenever you see an ad like this, think, “Who are they trying to appeal to?” Even if you decide to go with that offer, you’ll at least have a better picture of what you’re getting into. When I saw this ad, I thought, this bank is a bad deal for people who bounce checks.
Of course, a better tip is “Don’t bounce checks.” But, very often, people will choose the account that best fits the way they want to be, not the way they are. Don’t let that become a profit line for your bank.