February Bank Alert!


We support reforms to the financial marketplace that protect consumers from unscrupulous banks and lenders.

By Consumers Union on Wednesday, February 22nd, 2012

By: Christina Tetreault

For our February Bank Alert we’d like to highlight a new bank policy many of you may have encountered. The big banks have been imposing a back-door fee by raising the minimum balance required to qualify for a fee waiver on checking accounts. If you don’t keep a large buffer of cash in your checking account, you’ll have to fork over an extra $10 or more a month for account maintenance fees.

Bank of America, as it did with its failed $5 debit card fee, was one of the first to introduce increased minimum balances. In addition to hiking the monthly maintenance fee on the My Access Checking account from $8.95 to $12 a month, in May 2011, Bank of America imposed a $1,500 minimum balance requirement. Other banks soon followed. In June, Wells Fargo’s Value Checking minimum balance increased fifty percent, from $1,000 to $1,500, and raised the monthly maintenance fee one hundred fifty percent from $2 to $5. This fall, Citigroup quadrupled the minimum balance required to waive the fees on its mid-level checking account, going from $1,500 to $6,000 and doubled the monthly maintenance fee from $7.50 to $15! Consumers are not happy.

“Citibank starting December will charge me $10 a month just for having a checking account the same account I have had for 8 years just because now I don’t have a direct deposit in my checking account. I think that is not a nice way to treat an old customer after so many years start charging me $10 a month for having my money in that bank. If I keep the minimum balance they want me to I’ll not be charge the $10 dollars but I’m not sure I will have every month that balance since I don’t have a job now. It is very sad that only if you have a lot of money you don’t have to pay for having a checking account. This is a land were only rich people have all the benefits, I think that is not fair.”

Carmen from Delray Beach, Florida

While most of the big banks allow consumers to avoid the fees if they receive a qualified direct deposit, or if the customer has other business, such as a mortgage, with the bank, many will end up paying more for something that they used to get for free. The higher minimum balance requirements may end up pricing some out of the banking system.  While the median transaction account balance for all American families is about $4000, those in the lowest income bracket’s maintain less than $700. These folks, who usually live paycheck-to-paycheck, stand little chance of being able to maintain a balance twice what they have now to qualify for the fee waiver.

 “We have banked with SunTrust since 1976. The same account, have not changed. We had a SunTrust at Work Checking account, with direct deposit, that did not require any minimum balance and we did not pay any bank fees for monthly maintenance. As of November 2011, SunTrust has changed this so that is no longer available. Now we have several choices to not pay the $17 monthly maintenance with the additional fee of the $5 per month of use of our debit card…but they are horrible choices. Choice 1: $3,000 minimum daily collected balance and direct deposit, but only from an employer work place. Choice 2: $5,000 minimum daily collected balance without direct deposit or $10,000 total linked deposits! This is outrageous. My husband is semi-retired and in 2012 when he will begin to collect Social Security, the SS direct deposit does not qualify as “direct deposit” as it is not from an employer work place. So to avoid paying the fees we will have to keep $5,000 or $10,000 in SunTrust!!!”

Carolyn from Green Bay, Wisconsin

In defense of these changes, banks say they just have to keep up with the cost of doing business.  Banks blame the spate of fees and minimums on new federal regulations, such as the cap on interchange fees, for cutting into their profits. Jamie Dimon, head of Chase, said that these costs have to be “repriced into the business” – that is, customers have to pay so that banks can be as profitable as they can be.

Consumers have had enough! One study, by cg42 a boutique research firm, estimates that in 2012, the ten largest U.S. banks may lose upwards of $185 billion in deposits as consumers move their money out of these institutions.

“I just went back to work (at a substantially lower wage) after being laid off & out of work for 2 years. I am just getting back on my feet financially and cannot afford the extra fees and charges that my bank will be starting shortly. Of course, they said if I maintain a high minimum balance they will waive the fees – I live paycheck to paycheck I cannot afford a high minimum balance.  I will be changing accounts because of all these new fees and charges – I have been with my bank 14 years.”

Laurie from San Jose, California

“Suntrust recently notified us that they now will have a minimum balance of $500 on our checking account and $5/month fee on our debit card. This is on a checking account that was promised to be without fees forever. I am in the process of closing that account and banking elsewhere.”

William from Randleman, North Carolina

Have you considered moving your money? Did you drop your big bank because you were sick of being nickel and dimed? Let us know your story by emailing money@consumer.org.


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