Finance charges for keeping low balances in one's bank account

glennmagusharvey

Just one more reason the poor get poorer.

Chagen

Wait a minute, this actually exists?

And I mean, really exists, not just in the mind of some radical lefty?

ClockworkUniverse

My bank doesn't do this, as far as I know.

Chagen

I'd be shocked if any bank did this.

This is so ridiculous that the sheer idea sounds like a strawman of Capitalism.

SotiCoto

Wait.... in savings accounts or current accounts? 

Malkavian

Lots of banks do this. Bank of America does and so does Wachovia.

And now BoA is going to charging for using debit cards. Whhheeee.

glennmagusharvey

My mom was just on the phone with the bank.

Some banks, generally smaller banks and credit unions, are willing to let you have accounts without minimum balances.  However, they often have other restrictions.  For example, I can't write more than like five checks from my checking account on the free checking plan; if I got a basic account that lets me write unlimited checks, I'd either need like $500 or $1000 minimum balance or direct deposits or pay $8 a month in finance charges.

For larger banks (like Citibank), you might not even have that option, and your fees are likely gonna be higher.  You either maintain a minimum of like $500 or $1000 or $2500 depending on the bank, or you have direct deposits.  Sometimes you need to have both.  I remember that when I was a kid, my mom wanted me to open a bank account at a major bank, and Citibank was the one closest to our house.  I had to have an initial deposit of $1000 in order to open that account.  And the combined total between checking and savings had to be at least $1000 for me to keep it without service charges, or it would be like $25 a month or something.  Or direct deposit, but you're asking preteen little GMH for direct deposit from a job?

It just became easier to close that account.

For the case my mom was on the phone about, it's $20 a month below the minimum required balance.  You basically have to go call them up and beg them to rescind the charge.  It's not pleasant.

glennmagusharvey

Oh, and Chagen, if you really want to make this thread about socioeconomic class mobility, then look to those same bank account brochures: The more money you put into your account, the more benefits you get, and if we're talking really high numbers (five and six digits), you might even get a better interest rate than 0.10%.

On the other hand, my savings account accrues interest at a rate of...0.03% a year.  That's at a small local bank.  My parents' account at a major national chain bank: 0.01%.  Oh, and that's for savings.  Checking is a big fat 0%.  Want your checking account to accrue interest?  Put in at least like $25,000 or so.  Got only $100?  Well, for whatever reason, they can't even spare a few more pennies to give you every year.

If you want something in the single digits, like 1% to 5%, you're looking at balances in the six digits.  Or you could get a CD or something but you can't move your money for like six months or longer.

If you want to try your hand at mutual funds and the stock market, well, you can.  Stocks, of course, are well-known for going crazy.  Tried looking at market-traded mutual funds at Fidelity, and I found that I have to spend at least $1000 a pop on those; there are no smaller units.

So yeah, the rich get richer too.