6. "We're excited about your trip to Europe, too!"
It's bad enough that the dollar is hovering near historical lows against most major currencies, but when you travel overseas, every transaction comes with big fees attached. Take out cash from an ATM in London, and you'll get hit with a foreign-transaction fee, plus a fee for using a competitor's ATM. All told, it can cost up to $7 just to withdraw $200.
Everyone needs an emergency fund
It's a stash of cash, but how much do you need? And why should this take priority over other savings goals?
Credit card purchases aren't much better. Visa and MasterCard charge 1% of the purchase price for converting currency. And the issuing banks may take another cut, which can bring the total to 3% of your purchase price, says CardRatings.com's Arnold. "If people don't travel overseas very often, they just don't think about it," he says.
The best thing to do is determine which of your cards charges the lowest overseas-transaction fee. For people who travel a lot, Arnold recommends a Capital One credit card, which charges no overseas-transaction fees (and even declines to pass on Visa and MasterCard's 1% fee to customers).
Also, ask your bank about partnerships with foreign banks. Bank of America, for example, partners with Barclays Bank, saving its customers $5 per withdrawal from Barclays' ATMs in the United Kingdom.
7. "For all the fine print, we don't disclose very much."
Bank documents come loaded with small type detailing terms and conditions. But good luck finding out exactly what you're signing up for when you open an account.
Last year, the Government Accountability Office sent investigators to see how well banks explained their fees and other conditions to potential customers. Though banks are required by law to make this information available, the GAO said one-third of the branches it surveyed didn't provide the required information. Worse, more than half didn't have any fee information on their Web sites.
Nessa Feddis, a senior counsel at the American Bankers Association, questions the report's methods -- banks failed the test if investigators waited more than 10 minutes for the information -- and defends the lack of data online. Banks are afraid of leaving old, inaccurate information on their sites if terms change, she says. But without details on fees, consumers can't make informed choices.
"Banks are not complying with the law," says Ed Mierzwinski, the consumer program director with the U.S. Public Interest Research Group. "People need more information so they can shop around for the best deal."
8. "Your money might be better off elsewhere."
Banks offer lots of ways to earn interest on your money. Among them are simple savings accounts, certificates of deposit, money market accounts and individual retirement accounts. But they don't always yield the best return. The average savings account, for example, pays about 0.5% interest. But even in this low-interest-rate climate, you can do better -- 3% or more -- if you shop around.
"It pays to be a free agent," says Bankrate.com's McBride. "There is tremendous disparity in the returns available."
Banks have been expanding into other financial services for a decade or more, including comprehensive wealth management and financial planning, brokerage services and even insurance. The well-off who use these services are a bank's most profitable customers, as they keep the highest balances and are least sensitive to fees, says Maryann Johnson, the senior vice president of wealth market management at the bankers association.
That's something to remember when you talk to a bank's investment advisers: Many are paid a commission on investment products, says certified financial planner Craig DuVarney, meaning they often go for the easy sales.
"They don't have the harder discussion about estate planning, tax bracket and liquidity," DuVarney says.
Johnson sees it differently. She says that banks take a more holistic approach and that their wealth managers serve much the same purpose as financial advisers, with bonuses not only for sales but also for dollars invested, new clients and even customer retention.
9. "When it comes to banks, smaller is sometimes better."
Banks have been consolidating like crazy over the past decade. In 1990, the top 10 banks controlled 25% of the market; now they have half. This gives customers of large banks vast networks of free ATMs and branches across the country.
But it hasn't been entirely good for consumers, says Arthur E. Wilmarth Jr., a professor at George Washington University Law School. Though big banks offer many conveniences, they can come at a price: high fees. In 2006, the 10 largest banks generated 54% of revenue from fees and service charges. By contrast, the 10 smallest banks generated just 28% from those sources.
Everyone needs an emergency fund
It's a stash of cash, but how much do you need? And why should this take priority over other savings goals?
Not only do big banks bring in more fee income, but they also pay out less interest. According to Federal Deposit Insurance Corp. data, smaller banks generally pay higher interest on savings accounts and other products. For example, in 2006, the 10 largest banks paid an average 1.87% in interest for savings accounts, while the smallest banks paid 4.37%.
"The largest banks are no longer worried about being undercut on price," Wilmarth says.
10. "Your online account information isn't necessarily accurate."
Online banking has changed the way people handle their finances. They can pay bills online, transfer funds, track payments and get a more detailed view of their bank accounts than ever before. Unfortunately, it may not always show the proper balance.
With electronic transactions, ATMs, check cards and direct deposits, banking has gotten more complicated. ATMs and online bank statements will show deposits available before the money is actually in your account. Using your debit card at a gas station or to reserve a hotel room, for example, can put a hold on funds. Some merchants may be slow to send in charges. And banks can sit on deposits, so an out-of-state check may take up to five days to clear.
Add to that the constant reordering of debits, and your account balance can quickly become a moving target that's hard to track accurately day to day.
"Banks use different algorithms to process payments than what you see online," Harvard's McGovern says. "It gives you a false sense of security."
This article is designed around products that banks sell you. They are a financial shopping mall to sell you products for the benefit of the bank!
