The P.A.

A weekly address from Patrick Adams,
President of St. Louis Community Credit Union

Surprise – there are affordable checking options for you!

On October 1st, 2012, posted in: Uncategorized by 1 Comment

The headline article in the Wall Street Journal last Monday dealt with the fact that fees for checking accounts have risen nationwide.  As predicted, this is no surprise.

The banking world is in the business of making money for their stockholders.  Don’t be angry with them, they can’t help themselves.  If you owned bank stock, you’d want them to make money too.

The current monetary policy employed by the Federal Reserve reduces the ability for financial institutions to make income off the margin.  The “margin” is that special place where financial institutions are suppose to make their bones by taking in deposits and lending money.  What we can’t lend, we invest.  When rates are this low for long periods of time, banks turn elsewhere.  Surprise, fees are going up.  Honestly, this was as easy to predict as the Cubs lack of success this baseball season—in betting vernacular it was a “lock.”

I’ve talked about this before.  When stockholders are clamoring for returns, new sources of revenue have to be found.  The “unintended consequence” of low rates and government regulation is driving financial institutions to find these new sources to offset a reduced earnings picture and increased costs.  Surprise, your wallet is the first place to check—fees, baby fees.  Like your aunt’s annual Easter egg hunt, look in the obvious places first.

That being said, I was floored by the testimony that one woman in the article is paying $17 per month for a checking account.  I am not sympathetic.  If you allow a bank to charge you $17 per month, something is wrong on a whole bunch of levels.  For starters, that’s $204 per year to have a transaction account.  A checking account is a clearinghouse for the transactions in your life.  So to access her money by a debit card, a check, an ATM, on-line bill pay, and/or home banking, she pays $17.  That is not value…that’s a legalized form of robbery.

Let’s start at the beginning as to what might be wrong with this picture.  The woman in the article has an interest bearing account.  Let’s do the math.  She is earning maybe .25%…that’s “point two-five percent.”  That means on an average balance of $1000 for the year, she will earn $2.50.  She is paying $204 to earn $2.50.  Word to the wise; don’t seek her input as it relates to investment strategies.

Ladies and gentlemen, there is no way that this woman’s checking account has $17 of bells and whistles.  She has other options.  Let’s start with free.  Let’s start with a non-interest bearing account.  We have both—so do a number of other credit unions.

You need a checking account.  You don’t need one that charges you $17 per month.  Surprise, there are other places to go.  Do your homework and make the move—to SLCCU is one example of a prudent choice. Surprise.

One Response to “Surprise – there are affordable checking options for you!”

  • Eugenia Moseby says:

    I have alot of members who are switching from banks because they have started charging them monthly fees. There seems to be a bit of a delay because the banks sent out letters almost two years ago letting their customers know that they were going to start this.

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