Too busy to follow the news? NerdWallet recaps the major banking stories for 2012.
Prepaid debit cards evolve – for the better
In early 2012, we lamented the high cost of an average prepaid debit card – a whopping $300 a year. The prepaid debit of 2011 was characterized by nickel-and-dime pricing. Fees were charged for everything, including activating or closing the card, getting a replacement, receiving paper statements or paying bills. In mid-to-late 2012, however, the entry of new bank-issued prepaid cards, including pioneers Chase Liquid and American Express Bluebird, has changed the prepaid landscape. These quasi-checking accounts deliver what prepaid cards have promised for years: Affordability, security and spending controls.
Another bad year for big bank customers
In ongoing efforts to recover lost revenues from Dodd-Frank and the Durbin Amendment, big banks continued to raise fees and cut costs:
- Big banks charge an average of $117 a year for a basic checking account, up 6% from the beginning of the year. Fees outside of monthly service were also raised. US Bank, for example, raised its overdraft fees from $33 to $35
- Bank of America reduced the number of ATMs by nearly 10% and plans to close 13% of its branches. As most Americans pick a checking account based on convenience, closing branches and ATMs reduces the appeal of big banks
Separately, in 2012, big banks continued to exhibit bad-behavior and caught a lot of negative press (rightfully deserved). From HSBC’s money-laundering to allegedly manipulating LIBOR, to lawsuits on inflating the housing bubble and discriminating against black and Hispanic borrowers, it’s become almost impossible to put in a good word for your big bank.
Meanwhile, credit unions thrived
Almost half of federal credit unions experienced growth since 2011. 90% of states experienced overall gains in CU membership, with Virginia topping the growth list at membership growth of nearly 400,000 customers.
Deposit interest rates remained atrociously low
By September 2012, average interest rates earned on deposit accounts no longer exceeded 1%, even for a 5-year CD. Earlier during the year, the national rate for a 5-year CD was 1.22% (which, compared to prior years, was still atrociously low).
Ending on a better note: mobile banking improvements may re-shape banking
By the end of 2012, all the big-four banks offer the ability to deposit checks via mobile devices. Similarly, most of the largest financial institutions offer some ability to pay bills, send money to someone else, and deposit checks via mobile devices.