Ask the Money Coach: New Bank Fees Are Coming. Here’s What to Expect

Consumers scored a victory recently when Bank of America and a host of other banks decided to forgo charging bank fees on debit cards. But that doesn’t mean Americans won’t face other new fees and unexpected charges by the banking industry.

Here are several ways that U.S. banks are likely to sneak in new fees—and start squeezing money out of their customers in order to pad banks’ own coffers.

Lowering Interest Rates on Savings and Deposits

Think the interest you’re earning on your savings or money market account is pitifully low right now? It could get worse in the future if banks further decrease their deposit rates as a way to save money and, in effect, boost revenue.

According to Dan Geller, founder of Market Rates Insights, banks could lower their deposit rates by a scant 0.01% per month and still produce nearly twice as much in interest-expense savings as the new fees on debit cards would have generated.

By Geller’s calculations, a monthly decrease of 0.01% in the national average deposit interest rate reduces interest expense for banks by about $1.5 billion a month, which impacts a bank’s bottom line in the same way as earning this amount through fees.  And that $1.5 billion in monthly savings is far more than the potential $875 million banks stood to gain in monthly debit card fees.

In 2010, banks already lowered their interest rates by an average of 0.01% a month. So financial institutions that choose to progressively drop rates again in late 2011 or 2012 can simply say that they’re continuing a “normal” business practice as part of operating in a low-interest environment.

But make no mistake: by lowering the interest rates they pay on your savings, “banks can maintain a healthy net interest margin and protect their bottom line in the next two to three years until the economy recovers,” says Geller. “Better yet, this objective can be achieved with minimal effort and, most importantly, without alienating customers.”