The Bank Account: Rates

Here’s some information on fees for transactions (average of several banks in '97):

The fee for return of deposited check (bounced check) is a remarkable one: If you send a check to someone and there is not sufficient money in your account, the bank will return the check, and you have to pay a fee (fine) of $ 15. But you also have to pay this amount if a check from someone else to you is returned by your bank.

Depending on the type of account (regular checking, savings, etc.) there may be a required minimum balance to have certain fees waived. Some banks require up to $ 10,000 dollar average balance for their interest accounts. Most require something in the range of $ 500 to $ 750 for a regular checking account. Things will become different if they allow you into one of their employee packages. These packages are based on the fact that the company deposits your salary into their account every month. In case of an employee package, there is no balance required to get free checks and withdraw money from ATMs (automated teller machines) that are not owned by the bank that you have an account with.

On recommendation of my landlord, who happened to be director of international personnel affairs for another company, I took an account at Fleet Bank. They also had my company listed in their employee accounts, and do have automatic payment and free pay-by-phone in their package. Although many things are free in an employee package, stopping an automatic payment will always cost about $ 15. This amount has to be compared with making a free ‘800’ phonecall every month to order payments, or to put a 34 ct postal stamp (2000) on a written check. The pay-by-phone system I use is a good compromise between having to write checks each month and automatic payment with a cancel fee, but it requires substantial precision, because the automated system requires you to type approximately 32 digits before you’ve transferred money. Don’t type to fast, or too slow, because you have to cancel your faulty transfer and start again.

Thre is one caveat that I only found out about a couple of months later: The fact that the money is deducted from your account one day after you made the pay-by-phone transfer does not mean the other party cashed their check! The money is merely transferred into a ‘bank-by-phone’ account pool of the bank, where they will happily collect interest on your money until the other party cashes the check sent to them by your bank. In case of Utility companies, the transfer is by wire and takes only a few days. In the case of your landlord, it could be several weeks. The bank takes your interest in return for ‘taking care’ of your checks. A simple calculation example shows, that you loose about $ 15 per year in interest for every $ 1000 rent you pay, when it takes the landlord two weeks to cash your check. You will also never find out if the other party has cashed the check at all. In my case, it happened that the telephone company sent me a note in which they announced the suspension of my telephone line due to an unpaid bill. Surprise! My bank account showed that the money was deducted several weeks earlier, but due to a computer error at the telephone company they did not collect it. My bank took care of this problem, and solved it for me with the telephone company.

After two years, an attentive bank employee moved my account to another, higher interest, plan which resulted in a monthy bill of $ 6.50 for their pay-by-phone system on which the bank made most of their profit on my money. Needless to say I quit the pay-by-phone and now completed a full circle, moving back towards the postal checks.

The USA banking dinosaur days are not yet over. International competition will do them good. The trend in Europe is that banks are repositioning themselves as "outlet" centers that may offer multiple services to their customer base. These are the traditional banking services, but also travel services and insurance. Since insurance companies by nature are also involved in the financial sector, there is a major merge activity in Europe between banking and insurance institutions. In addition, US insurance companies are acquired by wealthy European banks. Eventually, one will see a total merge of these two type of institutes, and also an improvement of the services for the US banking customer.

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