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Imagine someone came up to you and asked you to lend them $1,000, which they would keep for anywhere from a few months to a few years. They wouldn’t pay you any interest but would promise to give you your money back anytime you need it. Would you lend them your money? Hopefully, you wouldn’t because that would be a terrible deal for you.
Yet, if you are like most Americans, you do this all the time. Chances are that your paychecks are deposited into a checking account that pays you no interest on your money. From the bank’s perspective, you are lending them your hard earned cash which they then invest or lend to other customers at a high-interest rate. And what do you get in exchange for lending them your money? Absolutely nothing! In fact, not only do you not get anything in return for your loan but in addition, many banks require you to carry a minimum balance. Some banks even go as far as requiring a minimum number of monthly transactions in order for you to avoid being charged a “monthly maintenance fee”!
It gets worse. If you make a mistake, such as accidentally spending more money than what is in your account, you are charged between $10 and $38 for every purchase! According to Bank Rate, consumers are paying $17.5 billion annually in fees for automatic overdraft loans. It is amazing that so many of us are willing to put up with this type of punishment. It is time for this outrageous abuse to end. The only way banks are going to change their ways is for a large number of consumers to vote with their feet.
We recommend you spend some time to look at all the fees charged by your checking, savings, and money market accounts. Ideally, they shouldn’t be charging you anything. Remember, you’re doing them a service by lending them your money, not the other way around. Are they paying you interest on your money or is your money losing value sitting in these accounts? If you are paying fees and the bank is not paying you any interest (or is paying you a ridiculously low interest like 0.05% or less), it might be time to switch banks. Click here to find out which banks we recommend.