Bizzy’s AM Coffee Biz-Econ-Life Links (042006)

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• USA Today reports that bank fees “get nastier” — The article at USAT is pretty superficial, which it shouldn’t have been, because the underlying piece USAT used from BankRate.com as the resource for the article has an awful lot of useful info consumers need to know (bolds are mine):
  

  The average balance requirement on interest-checking accounts hit a new high of $2,465. Note: This does not seem to be the case in the local Cincinnati-area market, where there are a lot of free checking with no minimum balance offers, even with interest; there may be quite a bit of fine print, but the offers are being advertised pretty aggressively. — Ed.) And you’re not getting much in return, as interest-checking yields remain in the cellar. (Now that IS true. — Ed.)

  The average bounced-check fee has increased with remarkable consistency since the twice-annual survey commenced in 1998. The first survey, in fall 1998, carried an average bounced-check fee of $21.57 and has increased about 25 percent since. Only twice in that time has the average fee failed to increase from one study to the next.

  ….. The cost of bounced checks doesn’t stop after the first occurrence. In fact, it gets worse. Why? Increasingly, banks are employing a tiered fee structure for bounced checks. Under the tiered structure, the cost of bouncing a check can increase as additional checks fail to clear.

  For example, since the last study, Wachovia Bank has introduced a tiered fee structure for bounced checks. The first check will cost $25, with the fee increasing to $30 each for the second, third and fourth checks, and anything beyond that is $35 each. Furthermore, Wachovia’s policy is typical of some other large banks, such as Bank of America and U.S. Bank, in that, when charging the fees, it counts all the occurrences during the past 12 months.

  ….. So, how best to protect yourself from the ever-escalating cost of bounced checks? The first line of defense is to sign up for overdraft protection, preferably by linking a savings account to your checking account. Also, be particularly diligent about recording all of your transactions, especially if you favor the use of a debit card or have regular monthly payments automatically withdrawn from your account.

  ….. ATM surcharges have soared more than 20 percent in the past two years, with the average surcharge rising from $1.32 in early 2004 to a record $1.60 now. Since the fall 2005 edition of the survey, 17 institutions raised surcharges, while just four reduced the fee.

  There has also been a sharp increase from one year ago in the prevalence of ATM surcharges, with Washington Mutual’s reinstatement of ATM surcharges in the fall study being the primary catalyst. Among the institutions that own ATMs, 98 percent now charge nonaccount holders for access, up from 89 percent two years ago and 91 percent one year ago. The bottom line: If you use another bank’s ATM, expect to pay (and pay more) for the privilege.

  There is some good news on the ATM-fee front, however. The fee banks charge their own customers for using another bank’s ATM dropped off notably since the last survey, with the average falling from $1.37 to $1.29. In contrast to the pervasive ATM surcharges, the prevalence of banks charging their own customers for using other banks’ ATMs has plummeted from 89 percent one year ago to a new low of 81 percent today.

  ….. The easiest, and most obvious, way to avoid ATM fees is to manage your withdrawals so that you only make withdrawals from your own bank’s ATMs. But let’s face it, that just isn’t practical 100 percent of the time. Fortunately, there are backup plans, such as getting cash back during a point-of-sale transaction when using a debit card. If you are a customer of a smaller bank or credit union with a very limited ATM network, investigate whether they belong to a surcharge-free alliance that permits use of any member ATM without additional fees.

  And it’s not all bad news. Here is a stat from the chart pages that BankRate put together to support their article:

  The average monthly service fee for noninterest accounts hit a new low. Yes, you read that right — a fee hit a new low. The average fee fell from $3 to $2.80, extending a gradual trend in recent years attributable to the growth of free checking.

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• Steve Forbes on immigration: In an editorial that appears sensible on the surface, Forbes talks about enhancing border security without managing to mention “fence” or “wall,” and tries to explain how “realistic” the abhorrent Senate Judiciary Committee bill with the 11-year path to residency is without addressing the financial drains imposed on us by the current population of illegals.
  Those serious shortcomings aside, Forbes does address a topic that for some reason is off-limits to most, the pitiful Mexican economy, and drops a stat on us that is mind-boggling (bold is mine):

  A unified, comprehensive approach must also address issues with Mexico. Almost 30% of Mexico’s labor force is now in the U.S. Why? Most of the Mexican economy is stagnant; it doesn’t create the needed jobs. To generate rapid growth, Mexico should simplify and slash its onerous taxes. For one thing, it should adopt a low-rate flat tax. Hong Kong and a number of central and eastern European countries provide ample models for Mexico to emulate.

  Mexico also should tear down the barriers that prevent its citizens from doing business there. The World Bank’s survey Doing Business points out some of them: Starting a business there involves nine procedures, which take nearly two months to complete. Licensing is even more complicated and protracted. Mexico ranks 73rd among the 155 countries surveyed in ease of doing business. In contrast, Canada ranks 4th, while Chile ranks an impressive 25th. Even beleaguered Colombia has surged ahead of Mexico in the survey. The situation in Mexico would quickly change if the Mexican government got its economic act together.

  Nothing would encourage Mexico to get its act together more than the knowledge that it could no longer use the United States as a safety valve for its failed policies.