Read the Fine Print: Lesson in Saving Becomes Lesson in Getting Shafted

A few weeks back, we posted about Youth Savings Accounts, which can be a great way to get above market rates for relatively small amounts of money.  Personally, I have set up one for my son and it allows him to earn 6.17% on $500, which is much better than the national average savings account rate.  Of course, leave it to Bank of America to find a way to screw people and their kids.  This case over at The Consumerist caught my eye:

In 2007, a mother of three thought she would introduce her kids to the world of banking by having them each open up passbook savings accounts at the local Bank of America branch. But rather than learning how savings earn interest over the years, the kids found themselves schooled in the finer points of bank fees and the need to check your statement.

The big issue was that the account started out as a “free” youth account, but quietly turned into an “anything-but-free” account in 2008.

The mom tells San Francisco’s KGO-TV that when she opened the accounts for the children, she had believed there wouldn’t be any fees associated with them because they were all tied to her existing BofA account. Alas, starting in 2008, each account was hit with a monthly fee of $3. In 2009, that fee went up to $5 per month.

Banks change terms and conditions all the time.  These changes are often buried within pages and pages of fine print.  As far as I know, all the recent laws such as the CARD Act only apply to credit cards and not deposit accounts.  Additional, the new overdraft protection rules only apply to overdraft fees.  This means banks can continue to add fees to savings, checking and other such accounts with little notice.  If you are going to take advantage of Youth Savings Accounts, be sure to read the fine print and be on the look out changes to the terms including:

  • Monthly Fees
  • Changes to minimum balance requirements
  • Changes to maximum balance that earns bonus interest rate
  • Changes to interest rates (this is a big on, because savings rates can change without notice)

I  do not bank with Bank of America.  Here are just a few reasons why:

Why anyone would bank at Bank of America is beyond me.  Jump over to The Consumerist to watch a video and to read more.

Mom Tries To Teach Kids Value Of Saving, Kids Learn Lesson About Bank Fees Instead | The Consumerist

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