The other day, colleague Andy Gallagher showed me his fee-laden Wachovia checking account statement, his blood boiling from unintelligible fees. But it was the “more info” thing that really stuck in his craw. You can see why by looking at the graphic below.
“What’s this for? I have no idea,” he said, pointing to the $3 fee on the screen. Seeing the swelling veins in his neck, I set out to find “more info.”
Bank fees are a powerful source of revenue for America’s financial institutions, and one of consumers’ top headaches. If it feels like the bank fee noose has closed tighter around your neck in recent years, it has. The Federal Deposit Insurance Corp. says the nation’s largest banks now generate 44 percent of their revenues from fees. Estimates of how much that amounts to vary between $30 billion and $50 billion a year, but it’s clear banks are rolling in money they take from customers, often without explaining themselves very well.
This is absolutely a huge problem for every consumer. The idea of banks charging fees where they won’t even tell you what they mean is, as far as I’m concerned, reason enough to leave that bank. Of course, they will tell you what it means — they just won’t make it easy for you to know:
Andy had the same question so many other American consumers find themselves asking every day: What the #%$& is this fee for? The Wachovia Web site provided no answer. Despite its lofty promise, there was no “more info.”
But Jim Baum, a Wachovia spokesman, did find “more info” for me. The service fee represents a recurring fee Andy is charged every month for the type of account he has, called a “simplified checking account.” Baum recommended that Andy upgrade to another, free account. I said that wasn’t the point.
“Why isn’t there ‘more info’ where the site promises ‘more info?’” I asked. […]
In the meantime, another Wachovia spokesman, Matt Wadley, pointed out, correctly, that the bank does have a 24-hour hot line customers can call with questions like mine.
Mr. Wadley is correct that you can call your bank to ask about a fee. When I recently called Washington Mutual about a fee listed on my bank account after an ATM transaction, though, they told me that they had no way of knowing the cause of the fee, and that I’d have to go to the branch where the transaction took place. When I did, that branch told me I’d have to go to the branch where my account was housed. So the process I had to take to track down a fee was:
- Go to WaMu.com and see that the fee had happened.
- Call WaMu’s 800 number and ask about the fee.
- Go to the branch where the ATM was and ask about the fee.
- Go to the branch where my account was opened and ask about the fee.
(I’ll talk more about this experience next week — it was, to say the least, instructive.) Why do they make it so difficult to track down these fees? The answer is breakage — the more steps they put in your path to request a fee reversal, the less likely you are to follow through. They don’t want to make it impossible, since that would be bad press; they just want to make it onerous, as onerous as needed to maximize fee revenue.
Every time you are told you need to make another call or complete another step, you should think, “This is designed to create breakage. They’re trying to get me to give up.” Then, don’t give up. Banks put this many steps in front of you specifically when it’s worth your while. When you give up, their revenue increases.
I’m glad the Red Tape Chronicles dug into these fees. As you saw, when they dug in, there was a free account alternative available. Look for these small monthly charges, call your bank, and say, “I don’t want to pay this fee. How do I do that?” If the answer is that the fee is required, change banks. (See also “A TOTALLY AWESOME economics paper” for more on this.)