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Banking fees on the rise
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October 4, 1996: 3:58 p.m. ET
Competitive pressures fuel climbing costs
From Correspondent William S. Rukeyser
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NEW YORK (CNNfn) - Competitive pressures, including the spread of credit cards which carry no annual fee, have cost banks some of their revenue. To make it up, many banks are boosting the other fees they charge retail customers.
"The banking industry is starting to really look at each of their customers more closely, and charging fees for expensive behavior -- giving those who are low-cost, very profitable customers better breaks," said Alison Deans, managing director for Smith Barney. (130K WAV) (130K AIFF)
"They're much more focused on being profitable than in the past. In the past, banks were very much motivated by being bigger," she said.
Some banks now charge as much as $20 for a late credit card payment, and many are imposing late fees earlier in the billing period.
Banks such as Wells Fargo, Bank of America, and others are charging fees of up to $1.50 to customers who utilize customer service more than a few times a month.
Certain banks are also targeting customers who pay off a mortgage in the first three to five years by reinstating prepayment penalties of as much as six months' interest. Such penalty clauses had been rare for more than a decade.
The situation is not hopeless, however, and alert bank customers have a few weapons at their disposal.
First, consumers should read the boring notices that come inside monthly statements: They often contain important information about new fees and changes in bank policies.
Second, try to reduce fee-bearing services, such as activities that necessitate personal contact with bank employees.
Finally, If new fees become burdensome, find out whether other local banks charge less. Or try negotiating, particularly if you normally maintain substantial balances. If you accept a mortgage prepayment penalty, you're entitled to a break on the interest rate, points, closing costs, or all three.
There may also be a silver lining if you're a bank stockholder as well as a depositor.
"Bank stocks right now in my opinion are a really interesting investment for the longer term because they're behaving much more along the lines of shareholders, and for shareholders, than ever before," said Deans. (103K WAV) or (103K AIFF)
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