Bank fees around the world

By Felix Salmon
September 23, 2009
conclusion when it comes to the subject of bank fees:

High prices are directly linked to opaque price information. Therefore, consumers in countries with opaque price structures are likely to pay more for bank accounts.

" data-share-img="" data-share="twitter,facebook,linkedin,reddit,google" data-share-count="true">

The EU, after a long and complicated study which I can’t even find on their website, has come to a simple and powerful conclusion when it comes to the subject of bank fees:

High prices are directly linked to opaque price information. Therefore, consumers in countries with opaque price structures are likely to pay more for bank accounts.

This is a universal law; it’s not confined to the EU. The poster child for high and opaque bank charges is Italy: there, someone who uses their bank account a lot gets charged €831 (over $1,200) a year, compared to just €27 for the same level of service in Bulgaria.

That number includes overdraft fees, of course, which are the cause du jour in the US. Yesterday’s news is kinda funny: as of October 19, Bank of America will “not charge overdraft fees on more than four items per day”. What they don’t mention in the press release is that the cap was increased from five to ten earlier this year: they seem to have adopted the yo-yo model of bank charging, where you maximally gouge your customers until the Senate Finance Committee starts asking questions, and then immediately scurry backwards in a desperate attempt to avoid regulation.

Regulation is still very much necessary, no matter how much BofA, JP Morgan, and others try to avoid it. Anything they announce this week could be unilaterally repealed next week, or next month, or whenever the issue gets forgotten about. A few simple rules would make everything much more transparent and customer-friendly.

More From Felix Salmon
Post Felix
The Piketty pessimist
The most expensive lottery ticket in the world
The problems of HFT, Joe Stiglitz edition
Private equity math, Nuveen edition
Five explanations for Greece’s bond yield
Comments
7 comments so far

Very good article. Once Americans realize that we are not the center of the universe, especially with the current group of leaders putting us in the back seat all over the world, things might change for the better. We need to all stop whining and start taking action to change necessary things in society – fuel consumption, overall waste in government, election of people who have no clue what they’re doing, and most of all stop spending money that we don’t have. If you don’t have the actual cash on hand, don’t make purchases. This goes for everything from houses to toasters. Works perfectly in other countries and it’s just a matter of time before this country will have to take a very big humbling pill.

Posted by Frank | Report as abusive

I have much trouble understanding why anyone uses these jumbo banks. There are much lower fee banks, both in the form of the credit unions as well as the consumer friendly banks like TD Bank.

I got sick of their high minimum balances and nasty fees within my first year of having an account there and rapidly moved on to cheaper pastures.

I’d rather see efforts go into encouraging banking at the existing cheaper banks then try to regulate the banking behavior.

“The EU, after a long and complicated study which I can’t even find on their website”

Do you mean (see under News)

http://ec.europa.eu/dgs/health_consumer/ index_en.htm

Posted by SP | Report as abusive

@OneEyedMan

Even if you start out with your accounts in a small bank it’s likely that, after some time, they’ll end up in a big bank. That’s what happened to me– my bank accounts started out, long ago, at Union Trust bank in Baltimore, which was a mid-sized local bank. After 25 years of takeovers and mergers, the accounts are in Wells Fargo Bank. I could start over and find a nice small local bank, but it hardly seems worth the trouble.

Posted by MattF | Report as abusive

In all seriousness Felix, why do you still have a Citi account? Is that your brokerage account? Why don’t you move everything to a credit union?

I think I’m going to drop BofA. I ended up there after two bank buyouts. They haven’t been awful, but I live in constant fear of unexpected fees. I need to find a good credit union.

Posted by zach | Report as abusive

i prefer carrying cash and if that means cashing in my mickey mouse paycheck for a few hundred bucks i will.
ive lost way to much money in atm fees and mimimum purchase requirments. ive found that having my stash at home helps me budget and strech my comical stipend

Posted by dvictr | Report as abusive

I have just closed out my account with RBC bank and I also closed out an account at Bank of America because of their predatory overdraft fee practices. Today I reached the limit of my tolerance of this overdraft fee theft when I was charged $164 in overdraft fees while my account only went minus by $11.84. They also processed the largest transaction first to insure that they whipped their slave the maximum possible amount. We are not slaves, we have the freedom to change to a bank that allows you set up your debit card to decline transactions that exceed the available balance (even if a card decline is slightly embarassing), thereby eliminating overdraft fees. I just learned that two US banks that allow this option are Wachovia, and Woodforest National Bank. If everyone closed out their accounts at banks that charge excessive and oppresive fees (such as Bank of America and RBC), and moved to more friendly banks that at least allow you an option, then this abusive banking practice would stop quickly. We can’t wait for the politicians (who don’t care about the plight of the low income, or the unemployed) to pass laws to protect us from this bank rape, we have to take action ourselves.

Posted by Chris | Report as abusive
Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/