While many of us are overwhelmed with exams and clubs we often forget to regularly review the terms and conditions on our bank account. This neglect may stem from our unwavering trust in the banking system or simply from unawareness of the vices of financial institutions. Right now, after partaking in what has been deemed unethical behavior by many, banks are facing new legislation that will all but end some of its greatest revenue initiatives, particularly overdraft fees.
According to Celent a research and consulting firm focused on the application of information technology in the global financial services in 2007, banks earned an estimated $29 billion from overdraft fees. The Consumer Overdraft Protection Fair Practices Act and the Fairness and Accountability in Receiving Overdraft Coverage Act attempt to establish fair and transparent practices related to the marketing and provision of overdraft coverage programs at banks. This new legislation states that banks cannot allow debit transactions to go through if the account has insufficient funds unless the consumer specifically chooses and pays for an overdrafting feature.
This attempt, with good intentions to lower fees paid to banks, is simply causing banks to tack on fees elsewhere to create revenue. Banks, fees, revenue … so what does this mean for you? This means that you may be paying new monthly fees for your checking account. While many of us are unfamiliar with financial terms, a fee is one that money-strapped college students are too familiar with. According to Smart Money (a well-known magazine), JP Morgan Chase renamed its Chase Free Checking and is now free only for account holders who use direct deposit or make at least five debit card purchases per statement, otherwise users pay $6 a month.
So, take time out of your day to look over and verify the conditions on your account. For those of you whose account balance looks something like $0.75, it might be better to keep it old school and put your money under the mattress.
(Editor’s Note: The new fees do not apply to all college students with Chase bank. Check with your bank about your specific account.)
Kenisha Smith is a member of the class of 2012.