Ask Karen Gibbs

Veteran business correspondent Karen Gibbs answers your personal money questions and addresses current topics that affect YOUR finances on a daily basis. Karen is the financial expert in your corner--no question is too basic or too small. Karen boils down the issues simply: here's what you need to know, and here's what you need to do. Send your money questions to and post your comments below.



Retired and strapped for cash!

Karen Gibbs

Help!  I’m retired and my pension is deposited directly into my checking account.  Now my bank wants to charge me a monthly fee if I don’t carry a large daily balance.  What can I do?

-Strapped for cash in Maryland

Drawing of Dollar BillDear Strapped, you’ve identified one of the reasons that banks are so disliked, but they may have done you a favor.

Financial reform laws enacted after the financial collapse of 2008 robbed banks of easy trading profits.  Now, they are looking for ways to replace those lost profits and have turned to fees, fees and more fees.

One major money center bank will soon start charging $25 a month if customers don’t maintain an average daily checking account balance of $5,000 or even more in CDs, retirement savings, outstanding installment loan balances or brokerage accounts.

These are large amounts for many of us and charging fees for not maintaining the above balances will generate a lot of money for this bank, with little or no effort on their part.

You don’t have to continue a financial relationship with your current bank.  There are several banks in the Maryland area (and online) that don’t charge fees for normal banking activities and don’t require you to maintain a large daily balance.

First, determine what services you need from your financial institution.  Don’t limit yourself to banks; credit unions are an excellent alternative with all the legal protections offered by banks. Is the financial institution conveniently located near your home or work?  Does it offer a network of no-fee ATMs?  Does the financial institution provide you with a debit/credit card?  Is it important to you that interest is paid on your checking and/or savings account balances?  (Please note that with very low short term interest rates, the average interest paid is less than 1 %.)Will you need overdraft protection, online bill pay or mobile banking services?
Many Maryland financial institutions offer free checking for having funds deposited directly into your account.  Once you’ve identified the services that you want, I suggest you go online to search for an institution that offers those services.  A good place to start would be here

Once you’ve decided on a new financial institution, call your pension benefits office and ask them how to change your direct deposit information.  You may have the option of going on line to change the destination of your deposit (the fastest method) or have the mail a form to you.  You may also ask the new financial institution for assistance in transferring your direct deposit.

Keep in mind that it may take a month or so to switch your direct deposit, and you may incur a service fee while waiting, but in the end it will be worth it as you’ll keep more of money for yourself instead of paying it to a financial institution that’s literally flush with funds.

Good luck!

- Karen

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