Your Money: In Search of an App to Monitor Average Bank Balances

Just 45 percent of checking accounts that don’t earn interest are free, according to the latest Bankrate.com survey of the largest institutions in each big city. That’s down from 65 percent in 2010 and 76 percent the year before.

Forget your outrage for the moment. On one hand, many of these institutions received federal bailout funds or other assistance. On the other, your representatives and others imposed new overdraft and debit card rules that made checking accounts less profitable. And if you invest in mutual funds, you’re probably one of the shareholders whose implicit pressure is pushing banks to raise fees to maintain profit margins.

Instead, consider the practical implications. The average minimum balance to avoid a monthly checking account fee rose to $585 last year from $249 the year before, according to the Bankrate survey. That’s a whopping 135 percent increase.

Banks do the balance math in several ways, using different minimums and fees and waivers, dangling carrots and wielding sticks. Many of the biggest banks will take figures from each day of the month and average them out.

Here’s the problem with that approach, though. Few if any banks give you a running total of your average balance for that month. Instead, they do the math at the end of the month and you find out then if you qualified for free checking. If you want to know how close you are in the middle of any given month to being assessed an $8 or $10 or $20 fee when the month ends, you need to do the math each day yourself.

The resulting effect is this: Many banks have built free-checking scoreboards for people who want to avoid fees, but they’re not putting the numbers up until the monthlong game is over.

Here’s what would be ideal: An online banking widget on the banks’ Web sites that tells you what your average balance has been that month. This could go in the same place on the page where you see your transactions and current balance. Even better would be a second figure that tells you what you need to average for the rest of the month to avoid a fee. A mobile banking app should provide the same information, too.

One reason that banks haven’t produced something like this yet is because of the constraints of their existing technology, according to Robb Gaynor, co-founder and chief product officer of Malauzai Software, which creates apps for financial institutions.

“Most core software products that banks and credit unions use don’t allow you to look back,” said Mr. Gaynor, who has also worked full time at banks. “If we ask a bank, give us a balance from four days ago, a lot of their systems can’t do it.”

So what often happens, he said, is that at the end of the month, some separate system that has been pulling and storing daily balances does the math to compute the average for the month. Then, it assesses monthly fees accordingly.

Why don’t banks just fix this and give us all running tallies? “Most banks are focused on your budget and expenses and looking backwards,” said Jacob Jegher, a senior analyst at Celent who specializes in online banking and has tracked consumers’ interest in third-party sites like Mint that help people manage their finances.

As for a more forward-looking feature that would tell you the balance needed to avoid fees, he said that he had not seen it on any list of financial institutions’ priorities. “Banks have historically tried to make money on fees, and they are desperate for fees,” he said. “Would it be in their best interest to offer it?”

Whatever you may think of banks’ motivations, there are some big institutions that make it easy to avoid fees without daily entries on a home-brewed spreadsheet.

Banks are quick to note that if you use direct deposit, there are in many cases no fees and thus no need for any average balance calculation. That is nice, except that unemployed people and many others don’t collect and store their income that way. Even people on a salary don’t always have access to direct deposit or use it. A survey in 2010 by the electronic payment specialists Nacha found that just 72 percent of full-time and part-time salaried employees received their pay through direct deposit.

All that a Wells Fargo spokeswoman, Richele Messick, would tell us is that a “majority” of checking account customers manage to avoid monthly service fees through direct deposit. The bank, which is still sorting out all the accounts it inherited when it took in Wachovia’s customers, has three ways of calculating the minimum balance: taking 31 daily snapshots and dividing by 31; looking to see if you’ve fallen below the stated minimum on any given day and levying the fee the first time you do each month; and taking just one snapshot at the end of the month.

Article source: http://feeds.nytimes.com/click.phdo?i=7d79ddf3e430227cf34000a79b062a5d