Your bank might not “be there for you” during these difficult times - always know your banking fees!
February 4th, 2021 by Erica Altman
My first bank account
I was one of those kids that was born into a “set-in-stone” family banking relationship. Both my parents had accounts with the same large bank, so once I was old enough for a bank account of my own, this made the choice simple for me and my parents. By using the same bank it was easier for them to transfer my allowance, or withdraw my monthly phone bill once they deemed me old enough to start paying for it (ouch).
The truth is this: because I opened and utilized a bank account at such a young age, I got used to the high banking fees and low interest rates. I became complacent, and accepted that it was a normal part of having a bank account.
Why I stayed for so long
Not to age myself, but I opened my first bank account with the big bank in 2004. Up until about 2015, this was a “Student Checking Account.” This meant that I wasn’t subjected to monthly maintenance fees. I had two checking accounts with them - one for spending, and one to set money aside for rent and such. I’ve always liked to set money aside for bills, because “out of sight, out of mind,” - right? What I didn’t realize is that I was keeping a sizable amount of money in a savings account with a whopping 0.01% interest rate. I try to keep at least $4-5k in a liquid savings account in case of emergencies. Thinking back on it, I dream of all the compound interest this money could’ve been making in a higher yielding savings account. According to our one-of-a-kind “Compound Interest Calculator,” I made about $7 in compound interest over 14 year for the money sitting in this savings account. LOL. If I were to have put this money into a high interest savings account with an approximate 3% APR, I would’ve received over $2,000 in compound interest instead.
My first credit card; also with the same large bank
In 2013, I opened my very first credit card with a big bank - it was their version of a cash rewards one. The problem was, it was difficult to pay off my statement balance - I’m one of those people that gets the statement, and pays it off in increments throughout the month. Unfortunately, this big bank didn’t have a function that shows how much I’ve paid towards my statement, which caused confusion and incidentally paying interest on my statement balance… Wealthy Idiots don’t pay credit card interest! I learned this the hard way.
Like many, I lost my job in July of 2020. For the first time since 2015, I didn’t have a steady income. I quickly learned that this large bank required at least one monthly direct deposit of $250, OR maintaining a minimum balance of $1,500. Well, this was a problem because my only source of income was unemployment which was issued to me bi-weekly via a debit card (also with a large bank, of course). With this debit card, I had to transfer the funds from the debit card to my checking account. Unfortunately, transferring funds from one account to another doesn’t qualify as a direct deposit, and it’s safe to say I was not maintaining a daily balance of $1,500 while unemployed.
Now that I’m older, and hopefully wiser - I asked myself these questions: why is this large bank charging me for having less income? Why do they care what my daily balance is? What difference does it make if my cash is flowing from a transfer or a direct deposit? I’ve been with them for 16 years, my history and loyalty should’ve been enough while they were emailing me saying they were “here for me during these uncertain times.” REALLY?! Please. If they were truly here for me, they would have eliminated the ridiculous fees that a slew of other banks would never dream of charging, much less during a global pandemic.
After this bumpy road, I decided that it’s MY money, therefore I get to choose where to invest it. I did some research, and found a bank account that better aligned with my financial mindset and goals. NO hidden fees, an interest-earning checking account, and high yield savings account… SCORE! I will go more into depth why I’m in love with my new bank account in my next post, and trust me - it’s worth a look!
From a young age, Erica’s grandfather taught her the importance of savings and compound interest. She’s had a savings account since she was 12, and contributed 10% of her income into it as she was taught to do. During college, she began investing an additional 10% of her income into the stock market. As she watched it grow over the past 6 years, she started to dig deeper into the personal finance world and realized these skills and concepts weren’t inherently taught to us. Knowing this, she’s become passionate about helping others succeed with their personal finances and breaking it down in a way that is motivating and makes sense.