Organizing Theory & Artistry

Spring Financial Cleaning: It’s Time to Be More Vigilant with Your Money

"Pay Director Edwin Stewart, Bureau of Supplies and Accounts" (between 1890 and 1901).  Photo by Detroit Publishing Company.  From the Library of Congress Prints and Photographs Division.
“Pay Director Edwin Stewart, Bureau of Supplies and Accounts” (between 1890 and 1901). Photo by Detroit Publishing Company. From the Library of Congress Prints and Photographs Division.

This is a very busy time of year for our family. We go through our finances for the past year with a fine tooth comb, prepare our taxes, review our 401(k) accounts, reconcile the flexible spending account and check our budget and other planning.

This is the first year I ever recall being surprised during any of this review process. Fortunately, my shock was not due to the state of our finances but rather upon discovering questionable business practices and fees among some of the companies we did business with in 2012.

Perhaps you can attribute it to the poor economy but the general tone seems to be that businesses are willing to do whatever they can to scrape together more dollars, even if that means taking advantage of people.

For example, we found that one of our medical providers had double-billed for its services, charging both the insurance company and us for the same amount. We complained and the business indicated that if we provided proof they would refund our money. We provided the documentation (that they should have had in their own system) and the charges were refunded to us.

Next, I was updating some accounts that are generally inactive most of the year and was shocked to discover every kind of fee imaginable being levied against these accounts by the bank. It was particularly bad when a savings account had gone from being an interest-bearing account to earning zero interest and instead being charged a monthly “inactivity fee,” all without notice to me. I no longer do business with that bank.

After some research on inactivity fees, I find these are really insidious fees that seem almost designed to take advantage of people who need their savings the most. Essentially these fees are charged by the bank after a period of time of “no activity.” For example, you might be putting your child’s birthday checks in a savings account for education expenses. If you don’t make any deposits or withdrawals on the account for a period of time (ranging from months to years depending on the bank), the bank can then start assessing your account a monthly fee, typically somewhere between $5 and $10, until the account becomes active again. It is not clear why the bank should be charging these fees in the first place but federal law allows it so they do.

Some banks complain that if you are not actively depositing into the account, they are not making enough money from you to cover their basic costs for preparing your monthly statements and other overhead charges. Some banks complain that they have no way of knowing how to contact you if you don’t actively interact with the bank–even if you have another account with the same bank that is “active.” These reasons seem very frivolous to me.

You might also be surprised to know that some banks have very high standards for what counts as “activity.” Interest deposits often don’t count. Sometimes banks will also not count deposits or withdrawals made electronically as activity. Some people have indicated that they have to physically go into the bank to make a deposit at least once a year to make it count as activity.

Don’t get caught by inactivity fees! Make sure you know your bank’s policies on these fees and make at least one active transaction on every account you hold at least once per year. Even a token dollar transfer in and out of the account should be enough to avoid the inactivity fees.

So a warning to all . . . make sure you are tracking all of your money and that at LEAST once a year you are poring over all the details of your accounts. If you have opted for electronic delivery of your bank or payroll statements, make sure you are logging in and downloading your statements every month so that you can catch these fees and account changes right when they start. Don’t blindly assume that things are just the same as they are last year.

Are you seeing an increase in business shenanigans? Please share in the comments.