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Marketplace Features
For cassette copies of our special series, "The Gelt Trip,"
or
any Marketplace program, please call: 303-823-8000.
Stories in the series:
Kids and Money
Reality Checking
Not Your Mother's Budget
Financial Planning
High-Tech Money Management
Reality Checking
Jessica Smith
Host: When you move to a new city or go away to college often the first thing you do is open a checking account, so you can start paying all those wonderful bills. Getting your financial house in order has never been a relaxing pursuit but setting up a checking account these days is more complicated than ever. But as Marketplace's Jessica Smith, if you put a little legwork in, you can find a bargain or two.
Within five minutes of my home, there are four different banks. I thought this would make my financial life easier. It actually made it harder. Setting up a new checking account was like performing a mental juggling act...which account had the smallest minimum balance to avoid fees, who has the lowest fees, who offers the best check writing and ATM services...should I go for the cheaper, no-teller style account? Every benefit, it seems, comes with a cost. Apparently, I'm not the only one frustrated with my bank.
Man: It's become more or less a MacDonalds type of atmosphere where you run in quckly get what you need and you get out if you have any real problems this isn't the fine dining experience.
Man 2: It's a little bit of chutzpah for the banks to charge you a fee to use a cash machine when your using the cash machines saves them having to pay tellers.
Man 3: In order for them not to take money off my checking I have to have $4500. i'm a nineteen year old kid where am I going to get that kind of money.
Braitman: I think it is becoming harder for consumers to bank.
Ellen Braitman writes about personal finance for Consumers Reports magazine.
Braitman: The problem is that fees have been rising, minimum balances have been rising, and consumers are being charged so much more money for their basic banking.
And its especially hard for people who can't afford to idle thousands of dollars in a no-interest -or virtually no interest --checking account. Many banks "allow" their customers to link several accounts to make that minimum balance and avoid fees. But Braitman says keeping a running balance on a bank credit card or money in a low interest savings account just to avoid fees isn't always to the consumers advantage.
Braitman: I think under the guise of saying "we can take away the confusion we can offer you everything here" keep your business all at the bank, when that may not be the best thing for you.
The wave of banking mergers and increased competition from other institutions offering bank-like services, such as mututral funds and brokerages, have forced banks to get creative. Banking experts all say consumers need to shop around, ferret out those good deals that DO exist. And don't just stick to the big banks, despite their slick global look and their presence on every street corner. Smaller institutions -- community banks, savings and loans, and credit unions, may have better deals.
Anderson: We survey a wide range of costs but clearly by any of those measures the smaller banks have the cheaper checking accounts.
Bill Anderson runs the publication Bank Rate Monitor, an industry publication. He says even in the country's top markets --where banking tends to be more costly --there's always at least one place offering no cost or low cost checking. So why aren't they the busiest places in town?
Anderson: I think consumers tend to be rather passive about this particular cost. Well, its hard to be very sympathetic to a consumer who complains about checking accounts fees but yet will not change their accounts. If we don't punish the banks for raising costs, which is the way the free market works, than they'l continue to raise fees.
Anderson says one trend that could help bring down banking costs is increased use of the internet. Several banks already offer on-line services like account transfers and direct bill payments. There are also virtual banks springing up -institutions that exist only on the internet. Without any physical branch locations. These banks often have good deals because their overhead costs are so low. And since people can theoretically choose accounts from anywhere in the country, some say on-line banking could create the kind of competition that may force banks to revive that old practice of giving away toasters to get customers.
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| Our series was reported by: Scott Horsley, Kristian Foden-Vencil, Amy Eddings, Jessica Smith and Michelle Brier; edited by Eve Epstein and Michelle Brier; engineered by Neil Rauch; with production assistance from Sara Ivry, Ben Donovan and Julie Hantman. |
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