Guess who's in your wallet?

I caught a news story today that talked about how banks are becoming more fee-based as time goes on. They get their fees through things like bounced check charges, overdraft charges, ATM charges, low balance fees, and the list goes on. The story interested me because I heard about a financial coach who had a client who put bank fees into his budget planning. Huh? Part of the problem with fees lies with the consumer of course, because if we don't keep track of our expenses, we pay. And part of it's the bank's fault, but of course, they are in the business of making money.

One example I heard was a guy who bought a pack of gum with his card for $1.19. When combined with some of his other transactions that day, he overdrew his account, and suddenly his pack of gum cost him over $33. Now, I think this guy was a fool for not paying cash for a pack of gum and not being aware of his checking account balance. But we as consumers have to be aware of the cost of doing business with the financial institution of our choice, and not whine or complain to government officials when we are penalized for making careless decisions. And we have to be willing to take our business elsewhere when we are dissatisfied.

The banks don't get off scot free either. While facing scrutiny from politicians, they are beginning to make some changes ahead of government regulation. Recently, some major banks announced that they would no longer process transactions from greatest to least, but rather will process them in the order in which they occur. The reason for doing the other method had been to mitigate risk, but to also increase the possibility of overdrafting and therefore boost their fee income. They are also making other consumer-friendly changes as well. Check out Bankrate.com's article for more information.

Take some time this weekend to review your bank's policies. If you're unhappy with the service your current institution provides, make a plan to move to another bank or credit union that may have more consumer friendly policies. But also begin making a budget to track your expenses. Pay for gum and other items with cash when possible. Studies show that people spend 12 to 20% more using debit cards and when they use cash. If you want to learn how to do a budget and make a plan to get debt-free, join us at our THRIVE! Financial Foundations workshop beginning Thursday, October 22, at the West Cabarrus YMCA.

If you're interested in getting control of your finances, contact me for a Free 30-minute Consultation.