A few months ago I opened a new checking account at one of those big, traditional, brick-and-mortar banks. I was trying to rid myself of the monthly fees that were being tacked on to my previous account.
The banker I spoke with was all smiles and sunshine when he told me I would have no monthly fees as long as I set up an automatic transfer between my checking and savings accounts. That seemed easy enough.
As you might have predicted, it did not pan out.
Not long after I opened this new account, I checking my online banking statement to find that the dreaded $10 “monthly fee” had reappeared. After some investigation, I learned that it was charged because my account balance had fallen below a certain level.
I’m sure many of you have similar stories of hidden, creeping banking fees, which seem small on an individual basis, but inevitably add up.
CNN Money recently took a stab at finding the banks that don’t crush you with fees, and simultaneously offer favorably high annual percentage yields. In order to find what they term the “least evil banks,” they looked for online and traditional banks that fulfill the following three criteria:
- Zero ATM fees, or reimbursement for fees
- Free checking
- Relatively favorable interest rates on checking accounts
The specific terms and interest rates of these banks vary slightly, but they all offer some combination of these positive factors. Most of the banks do not require a minimum monthly balance, and they all offer free checking.
However, they still place certain limitations on which ATMs customers can use without incurring a fee. Likewise, to make a deposit at one of the online banks that made the list, customers have to mail in checks or transfer money from another bank. Below are the top “least evil” banks and what they offer. Needless to say, my bank didn’t make the list.
- Ally Bank – No monthly fees, no minimum balance, free ATM withdrawals anywhere, 1.05% APY if your balance is at least $15,000, 0.5% if it’s below
- ING Direct – No fees on 35,000 ATMs in network, 1.2% APY if your balance is at least $50,000, 0.5% APY if it’s below
- USAA – No monthly fees, no minimum balance, 10 free ATM withdrawals per month and up to $15 refund on other bank’ ATM fees
- Capital One – No monthly fees, no minimum balance
- Alliant Credit Union – No monthly fees, no minimum balance, free use of 80,000 ATMs, 1.02% APY if you opt out of paper statements and make one electronic deposit per month
CNN Money analyzed some important banking factors which tend to cause enormous annoyance and inflict needless costs on customers. However, in determining the “least evil banks,” I wonder if they could have paid additional attention to perhaps more significant banking practices.
Bank mortgage lending, for instance, played a crucial role in the recent economic recession and continues to matter as the economy struggles to recover. Additionally, banks regularly issue credit cards, which has amounted to large nationwide personal debt. Both of these issues are riddled with complications, but most customers would surely prefer clarity to obscurity on important financial matters like these.
To find the “less evil banks,” we might do better to dig into a bank’s lending policies and the credit card fine print to determine which banks clearly communicate fees, risks, and upcoming policy changes.
Lastly, banks, as businesses, are woven into the fabric of communities. Businesses regularly contribute to their communities not only through economic practice, but also by supporting volunteer efforts and offering academic scholarships. While these practices are usually not entirely altruistic—they foster customer loyalty, which brings more business—they are, nonetheless, beneficial to a community.
Perhaps CNN Money could also look at these less tangible ways that banks serve their customers to determine which banks are truly “less evil.”
Published or updated April 3, 2013.