Question

EVALUATING BANKING SERVICES

“Wow! My account balance is a little lower than I expected,” commented Melanie Harper as she reviewed her bank statement. “Wait a minute! There’s nearly $20 in fees for ATM withdrawals and other service charges. Oh no! I also went below the minimum balance required for my free checking account,” Melanie groaned. “That cost me $7.50!”

Melanie is not alone in her frustration with fees paid for financial services. While careless money management caused many of these charges, others could have been reduced or eliminated by comparing costs at various financial institutions.

Melanie has decided to investigate various alternatives to her current banking services. Her preliminary research provided the following:

Mobile banking—allows faster access to account information to quickly transfer funds and make payments and purchases. May include access to expanded financial services, such as low-cost, online investment trading and instant loan approval.

Prepaid debit card—would prevent overspending and require staying within the budgeted amount loaded on the card. Cards are usually accepted in most retail locations and online. A variety of fees might be associated with the card.

Check-cashing outlet—would result in fees only when services are used, such as buying money orders, cashing a check, obtaining a prepaid cash card, or paying bills online.

Many people do not realize the amount they pay each month for various bank fees. Some basic research can result in saving several hundred dollars a year.

1. Based on research and/or personal experience what type of financial service providers would you recommend to Melanie so that she can:
   1. safely save her money,
   2. conveniently access her money, and
   3. minimize service fees.
2. You may also share types of providers that you caution her against using (please provide constructive rationale).

Answer 1

a. According to the research and personal experience, the safely saving of the money is possible when minimum use of ATM and keeping the account balance above the minimum balance required. This will eliminate the “ATM fees” and “Not maintaining Minimum Balance charges”.

b. Melanie should have safe assessment of her account through visiting the bank branch to enquire the Account balance. To have safety of the account and her money, she should stop Mobile assessment of account. It will save the Mobile banking charges. ATM assessment of the Account balance should be reduced to minimize the bank service charges.

c. To reduce the charges towards the Mobile banking and Prepaid debit card, Melanie should use the Checks to release the payments as checking facilities are almost free to the Account-holders. She should withdraw money from her account less frequently to reduce the “Transaction charges”. Monthly transactions should be limit out to the allowed numbers.

Caution : Melanie should not enquire now and then the Account balance as it will increase the transaction. She should use less and less online banking services as all these services are totally chargeable.