Inactivity Fee Gobbles Up Funds From Customer Who's Now Looking For New Bank
New Jersey resident Daniel had a checking account he used for eBay, but he forgot about it and sure enough his bank had to go an empty out the account because his money spoiled and had to be tossed out like sour milk. You know, due to inactivity fees.
Daniel got hit by some bombs, and now he's in the market for a new bank:
I have been a big fan of your site over the years. I have learned a lot and even had an opportunity to add meaningful and informative comments to some of your stories. One of my lengthy comments was even turned into a story on its own by your staff. Now, I have a problem and hope some of your readers may be able to give me some assistance.
I live in Northern New Jersey and have banked at Sovereign Bank for many years. I originally opened a Free Checking Account and a Savings Account, but a few years ago opened a second Free Checking Account that I used exclusively for transferring funds to and from my Paypal Account I use for eBay.
As time went on, I didn't need to fund my Paypal Account and completely forgot about that second Checking Account. The last time I checked the balance, it was $50.41. I received a notice in the mail last week that mentioned that the account had a zero balance and that it would be closed soon if I didn't add funds. I knew that the Free Checking Account that I opened had no annual fee and no minimum balance, so I figured that there must be a mistake.
I went to my local branch to find out what happened and discovered that I was charged a $12.00 per month inactivity fee because I hadn't transferred funds into or out of that account for over a year. I hadn't checked the balance in that account for quite a while and it only took a few months for my account to be completely wiped out by their fees. Because of the zero balance, Sovereign Bank closed the account. I had over $10,000 in my other Checking Account and Savings Account and used both of them regularly. I just forgot about the second Checking Account and before I realized what happened, my $50.41 was gone.
To be honest, right or wrong, I felt robbed. Since I had been a good customer of Sovereign Bank for so many years, I hoped that I might be able to get those fees refunded. In my mind, all I did was forget about my account and felt I shouldn't be penalized $50.41 for it. If I had just transferred money in or out of that account or even wrote a check five months ago, I would still have my $50.41 today.
I tried to appeal to my local branch and even spoke to four different people at 877-SOV-BANK over a period of a few days, but no one seemed to care. Much of what I heard were scripted responses that sounded like they were being read right from their Customer Service manual. It was obvious that those fees are there to catch people who innocently forget about their money. I was basically told "Sorry Charlie, we got your money and we're not giving it back". I was then told how important I was as a customer and how much they valued my business. Yeah, sure. Again, it sounded as if it were read right out of the Customer Service manual. If I was really important to them as a customer and if they really valued my business, couldn't they do something to help me?
I had called my local TD Bank branch, which is a pretty big bank here in the Northeast. I asked them how much their Inactivity Fee was and they told me that they did not have Inactivity Fees on their accounts. Even when I mentioned to Sovereign Bank that their local competitor didn't have these fees, they still wouldn't do anything for me. I realized that if I had banked with TD Bank instead of Sovereign Bank all along, I would still have my $50.41.
I'm now waiting for one last check to clear and then am considering closing my accounts at Sovereign Bank and opening accounts at TD Bank instead. I obviously feel that Sovereign Bank does not value me as a customer.
Can any Consumerist readers recommend a good bank here in Northern NJ? Has anyone had any good experiences with their bank that they can share?
Somewhere out there is a northern New Jersey Consumerist reader who knows of the perfect bank that's willing to take Daniel into its arms in a loving embrace while he kicks up his heel and violin music swells in the background. This is that reader's chance to hook them up.
(Photo: The Consumerist)
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Comments:
TD bank is an evil Canadian bank!!! They have some crazy fees too for things don't let them fool you.
There is no perfect bank in NJ. I've used Wachovia now for almost 14 years (well it wasn't always Wachovia). I've never gotten charged fees for anything. I'm also pretty sure I've left my second checking account go untouched for at least 2 months and never received any fees.
Like most states, I bet after three years it would have gone to the State's Unclaimed Property office where it would be available to the poster should he ever remember it.
Looks like the banks have caught on and decided they better steal the money before they have to hand it over to the state for safe keeping.
Yesterday I noticed that my credit union account that I kept 25.00 in a savings account (just to continue being a member and have access to certain perks) was being charged 50 cents a month for a "paper statement fee". I don't care if they send me a bill or not - I don't need to keep track of the 1 cent I get every month in interest. I don't recall ever getting a letter about the fee but it's possible I overlooked it. Even the credit unions can nickel and dime you to death.
I bank with TD (albeit in Toronto), and they have been *the best bank ever*. When I moved to Toronto from the US, they were the only ones that would give me a mortgage (the sticking point for the other banks seemed to have been that I wasn't a Canadian citizen). TD's customer service has been the best I've experienced, I have no complaints!, and I've lived in Tennessee, Ohio, Vancouver, London UK and Toronto (so, I've experienced lots of banks, and like everyone else, I've experienced lots of ridiculous bank "rules".)
Whatever you do, I would give up the $50 as lost, and move your money from Sovereign. And because I'm petty, I would write the upper levels of Sovereign a letter explaining why me and my money were hitting the road. They can't be in such good financial shape that they can afford to continue to piss off their customers with this ridiculous fee.
Something similar happened to me with a BofA account that I opened for the purpose of receiving a wire transfer. I had only $50 in it, and because the account was not properly linked to my other well-funded BofA accounts (their error), they charged me an $11/mo fee. I noticed after about 4 months. I went into the branch where I'd opened the account, and they apologized and promptly refunded the charges.
I use Chase in NYC and Northern NJ (Bergen County). If you do direct deposit from where I work, they even waive the fees on the checking account. I'd check if your job has a similar relationship with any banks.
Sorry , can't help you with a NJ bank , but $12 a month ?!!!. Are they serious ?
Two points :
1) Reincarnation is real . Bonnie and Clyde are back in another life and this go-round they are working inside the banking industry.
2) If you are going to have a none too active account ,you may want to give ING a look. You use their Electric Orange checking just like a regular checking account except that you are not issued checks. It's all electronic. There are no fees of any kind. I have been using it for years and it works quite well. (I have even used the electric check feature to end-run the PayPal monopoly on Ebay. I happily accept checks from ING because they are only issued against good funds,other Ebayers in the know do likewise)
Now ING is not perfect. But they are an improvement over paying $12 a month for...Nothing.
@Skankingmike: Wachovia does charge inactivity fee and they don't let you sit a whole year too like Sovereign. I ended up losing $5 with them and they wouldn't do anything about it so I just closed my account and took business elsewhere.
@Skankingmike: Do you have any examples of these "crazy fees"? As a long-time Commerce/TD Bank customer who is pretty well-versed in their fees, I'm curious as to what you're referring to.
BofA did something similar to me. I was in college and had 500 dollars in a no-fee checking account that I didn't spend.
Basically, they started charging my account about 50 dollars a month in fees...this was pre-online banking and pre-check card...I was in college and had no thought to check my monthly statements because nothing had changed...
When I checked the account a year later...my account was 200 dollars in the negative...all because of fees.
I have a BoA account that has the same condition. It's my personal "Mad Money" account and rarely has much in it (Usually around $20), but I have $5 per paycheck direct deposited into the account to keep this sort of thing from happening.
Close the account - Sovereign bank almost made me miss my condo closing because they wanted me wait for an account transfer to clear. From my savings account at sovereign to my checking account at sovereign. They also charged me for checks when I opened my account, when one of the main reasons I went with them was because they offered a free first order of checks.
I have a checking account with a credit union, and a credit card from them, that have been open since I was in high school...probably ~23 years ago. I occasionally still use that credit card, and I have like $60 sitting in the checking account, that hasn't had a check written against it in at least 15 years. Not only is the CU not draining my account for me, but I get interest on that money sitting there too.
If I ever got shot to the future Futurama-style, I'll be rich from my tiny, unused, nearly-forgotten checking account's interest.
Try Investors Savings Bank. Local, friendly, and well-run bank with a bunch of branches all over north Jersey. Good luck!
Want to make 100% sure you'll have your money stolen? Put it in a bank. I guarantee they will start stealing money from you in less than a year. Want a safer place for your money? Store it in your mattress. Banks are in the fee business. This is how they make money. No amount of customer service will help. Their job isn't to serve you, their job is to convince you that taking your money from you was proper and it was your fault for allowing them to take it. You didn't read their terms of service, you ignored the notice that changed your terms of service that now allows to steal a small amount of your balance each month. The law is on the bank's side: they can charge you for anything they want. Sorry, but you will get nowhere with them. Sovereign Bank is horrible. I know, because I am a former Sovereign bank customer. The "new" Sovereign bank is the same as the old Sovereign bank.
Aww, Captain Duvel Moneycat was such a cute little kitteh in his youth ... sure glad though that he has upgraded from nomming on wallets to nomming on Starbucks oatmeal ...
It sounds like that local bank you checked out might be as good as any, since they don't have "inactivity fees". Ask them to provide a list of other fees -- ask a variety of banks -- and compare them all.
I used to be a loyal bank customer at a bank that no longer exists (it's been gobbled up many times over -- probably CHASE by now). I had about $30,000 with them at the time I wrote a check for $5,000 to a vendor. That vendor (who was a freelance graphic designer) took my check to my bank and tried to cash it. He was told that since he didn't have an account with them that they would charge a fee for processing the check. I can't remember what that fee was, but I do remember being shocked when I heard the number (it might have been a percentage).
Regardless, it was MY money in MY account and it was ME who wrote the check. My own bank tried to penalize one of my vendors simply because they didn't have an account with that bank? Who do they think they are? It's MY money -- not theirs. If they want to turn the guy down for a loan, fine. But to deny him the money I gave to him, or to charge him a fee to get it, is inexcusable.
I realize a lot of banks now do this -- and I still don't think it's right. Even on a personal transaction I don't think it's appropriate, but with a business transaction it's not cool at all. It took me a long time to find a graphic designer that I liked, trusted, worked well with, and who delivered exactly what I wanted -- only to have him call me a few days after the job and tell me that he can't do business with me any more unless I find alternate forms of payment. Well... I did find alternate forms of payment -- I switched banks immediately! It took a couple years to transfer everything over (as paperwork tends to linger with various accounts), but it was well worth it.
What I would recommend: Open an eTrade Checking and eTrade Savings account. They pay MUCH better interest on your money that most everyone else. Sure, they don't have physical branches everywhere -- but that's not a big deal. I still have a credit union account and accounts with Wells Fargo. I tied my eTrade accounts to those accounts -- so I can send money from one to the other, in either direction. If I need to cash a physical check I just do it at a local eTrade or Wells Fargo location. If I need the perks of a credit union loan I can use them. In any event, all of my funds can be pushed/pulled using my eTrade master account -- and again, they pay one of the highest rates around. Also, there are no fees associated with my accounts. No fees associated with the VISA/Debt card at any ATM.
I've been VERY happy with eTrade. I would strongly suggest looking into it -- even if you still keep the other bank accounts open for whatever reason.
Just be glad they didn't start charging "overdraft fees". A friend of mine had a similar situation with his Sovereign Bank account, the only difference is that they didn't stop at $0. Once they got to $0, then they started charging horrendous (and miscellaneous) fees that ended up putting him at a balance of about -$525.
And no, they did not want to fix THEIR mistake.
@squinko - applauds the death of FBC: It's Sovereign, and I have the same account, and they are always sending you account updates/changes/etc in your statement.
@squinko - applauds the death of FBC: The fees might have been hidden within that long, tiny print section of the bank paperwork. The part that most people don't read very much of because it's A: Tiny and B: In complete legalese. While we're "supposed" to read it, how many of us really do?
@squinko - applauds the death of FBC: Of course he was informed about it in teeny tiny print somewhere, that does not make it right on the banks part. They have his phone number and his address....maybe they should call him and say,
"You trusted us to hold your money, but you seem to have forgotten about your account."
Even if they wanted to close his account for inactivity, they could still cut him a check and close the account rather than steal the money. (yes, even if they disclosed the fee...taking something that is not yours is stealing - basic kindergarten stuff)
@squinko - applauds the death of FBC: Agree. I don't want to blame the OP - this sucks for him - but everyone should make a habit of getting and reading every bill and statement they receive every month. People make mistakes, computers are only as smart as the people who write the code for them, and identity theft happens. There is no good excuse for not noticing fees or problems for several months. Reading every bill and statement can save you a lot of headaches and heartburn.
/rant over
@Skankingmike: "Evil Canadian bank"?? You must be trolling, because that can't be serious. None of our "evil" Canadian banks have went out of business yet, and won't be, so at least your money would be safe with them.
I have an account with TD in Canada, and I have no service fees for not using my account. The only fees I pay are for using my bank card at non-TD machines. It's not perfect, but it's definitely far from "evil".
Have a friend or relative in the military? Have them help you open up an account at a military personnel credit union. These establishments are no nonsense, and they don't swindle their customers with fees (hidden or in the open).
Wow, the idea of having $10,000 available at my dispense makes my head spin...in a good way. Sigh, if I hadn't gone to grad school I'd be well on my way to that. Damn foresight...
I'm pretty sure I got Bingo on this post alone.
Do any of the cards have "Credit unions are God" as a square?
@YouDidWhatNow?: Can you name this credit union? I'm considering switching banks after WaMu was eaten up by Chase and am interested in people's experiences with credit unions in the NYC area.
@sibelius: but do NOT open an eTrade brokerage account. Unless you have a ton of money in them, or add $3k a month to it, or do a certain # of trades a month, eTrade WILL drain your broker account dry with inactivity fees. Do NOT use eTrade unless you are a day trader; buy and hold is against their rules.
So, based on their shady brokerage rules, I refused to keep my money in eTrade's bank either.
At least $.50 is not far off from the CU's cost to generate and send that paper statement. $12 isn't anywhere near what it costs a bank to keep an inactive account open.
Provident Bank always seems to have good interest rates and advertise that they have few fees, but I have no personal experience there.
I've been with PNC for years and they were pretty generous when I had a student checking account but have been throwing a ton of stupid fees on my now non-student account. Charging me $4 a month on savings because they didn't think I had enough money in it, $2 a month for a "check images in statement fee" that there's no way to get rid of, etc. The only upside is that they have a lot of branches on the east coast and all of those 99C atms in NY McDonalds that are part of the Actors FCU are free for PNC bank customers.
Best bet is find a decent credit union or go to online banking. I'm in the process of migrating to HSBC Online but it requires a lot of planning and a different way of thinking about where my money is and how to access it.
He should feel robbed. He was.
TDBank is great. If you keep enough money in your checking account, they refund your atm fees. I went to Vegas a while ago and the atm fee at the strip club was 20 bucks. Didn't faze me one bit, TD refunded it.
@vastrightwing: Sure, because we all know that keeping your money in your mattress is such a great idea. It's a good way to loose 100% of your money when your kids decide you need a new mattress and replace it without telling you as a surprise :p
Two words: CREDIT UNION!
@catskyfire, dave23: Like SteveDave said, that bank sends out statements, which all banks do unless you specifically request otherwise. If he was ignoring the statements that told him his account was being charged a fee, then he doesn't deserve a refund. If he requested to not get statements in the mail, then the onus is on him to check his own account and he still doesn't deserve a refund.
FWIW, when I joined my credit union (and the bank I was with before that), I was informed of all fees that could possibly be charged to my account and the reasons for them.
TD is the best bank in the tri-state area.
This is right up there with ' maintenance fees ' . Do you mean to say they give my account a tune-up & lube .
These banks and brokers are so full crap . They get your money along with thousands if not millions of others to invest while you bank with them .
I look at it like this . When you deposit your money in let's say a savings account for 2% interest in essence you just gave the bank a loan at 2% . Now you can recall the ' loan ' at anytime by withdrawing your money but still the banks got a very cheap loan especially in combination with all their other customers .
And if you ever look at things like CD rates you frequently see the more $$$ you put in the higher the interest rate and shorter time you have to leave it in. These banks for the most part have MILLIONS of dollars to invest on a daily basis .
But why the fee for inactivity ? -that bank got more interest off that account and thousands of others with money just sitting their . I don't know what the rule of thumb is of how much money these banks must have available for immediate withdraw but it's still basic theory make money off the customers deposits by investing or lending that same money and not rigging an account with a bunch petty & gouging type fees .
@squinko - applauds the death of FBC: If I was home, I could open all my statements and probably find the newest fee schedule, which I know they send out. And even accounts that are paperless will send you a electronic version of the same thing. My Bank Of America Credit card account even goes as far as letting you know when they sent you things under the Statement screen:
@MikeF74: If his other accounts were active, that might be the reason why it didn't go to the state. At my bank, we get a list of "dormant" accounts each year. If the owner has any other account that's seen recent activity, it's taken off the list.
I would make a final visit to the branch, give them one last chance to credit back the fees - explaining that you've got $10k in a current Sovereign account should go a long way and threatening to pull it out should go even further.
But no matter how it turns out, get a new bank, because no one should have to deal with five other people to get something like this resolved. I recommend TD Bank.
@YouDidWhatNow?: Word of advice - if Mom offers you an assload of money for that last can of anchovies, take it. Salty fish are tasty (to some people), but they're not worth that much.
$50.41 $50.41 $50.41 $50.41 $50.41 $50.41
The only thing Daniel's story was missing was an all-inclusive list of the other things he could have done with his $50.41. LOL.
Just. change. banks.
@Speak: Most credit unions, being member-owned non-profits, are better for most people's needs than most banks. If anyone out there has ever found a bad one, I'd like to hear about it.
I *highly* recommend USAA. My husband and I use them, and we have never, in over 4 years, had a problem.
@katstermonster: Get a job as a civic worker in Toronto ($50k a year starting, 10 sick days a year, and I think 3 or 4 weeks vacation). Or a bus driver in Winnipeg (Salary goes up to $80k a year). Going to school is a waste of money, you just need to join a union!
Was he informed of the inactivity fee before he signed up for the account? If it was a fee that was instated after he opened his account, or one that wasn't disclosed to him beforehand, he has a case for a refund. Otherwise, I don't think that forgetting about a bank account is a valid excuse to have anything refunded.