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Avoid being nickel and dimed by banks

Jane Pribek

Jane Pribek

While lawyers might be unpopular in some circles, bankers may be closing in on us.

As of this past summer, by federal law, banks can no longer charge (in my opinion) outrageous overdraft fees, so they have to make up the shortfall somewhere else. Other fees appear to be the banks’ strategy.

An attorney recently informed other members of the State Bar of Wisconsin’s Practice 411 list serve that he’d been charged 45 cents for a cash deposit of around $6,000 or $7,000 into a business checking account. The charge apparently was for counting the cash. It’s called a “Currency Deposit Charge.”

This article isn’t about banker-bashing. They have to eat, too, and their industry is having a tough time right about now. How many of us know someone who was “upside down” on their mortgage and chose to walk away?

If the banks opt to impose more charges, that’s their prerogative. But I want to be clearly notified about them, and I want options to avoid them if possible, as part of an overall banking package that suits my needs.

Maybe you’re thinking, 45 cents is not much money, lighten up! My response is, it adds up, if it’s charged daily or even every few days. Perhaps more importantly, it doesn’t build goodwill. It makes you wonder what other charges the bank might assess, in hopes that they’ll be overlooked and just paid by an office manager.

It’s sort of like lawyers charging clients for expenses like faxes or long distance. My guess is most of you rarely pass those expenses on to clients anymore, and just build the cost of overhead, including long distance and faxes, into your fees. Those particular costs have dwindled significantly in recent years, thanks to technology. But also, it would appear to clients that you’re nickel-and-diming them, and that doesn’t build a whole lot of trust.

So, I did a little Web research on some of Wisconsin’s financial institutions (see sidebar). Along the way, I’ve come up with a few general observations, for those who are opening their first business checking account, or considering making a switch.

Good Things Come in Small Packages.

You’ll notice that none of the financial institutions in “Pribek’s Picks” are large, national banks. I tend to prefer the smaller, local version of … well, just about everything (with the possible exceptions of T.J. Maxx and Target).

It’s my impression that the bigger banks are more likely to charge fees I don’t like.

I hate to be disloyal, but Wisconsin-based M& I (Marshall & Ilsley) Bank offers “free monthly currency deposits” for up to $1,000, $2,500 or $5,000 for its basic, plus or premier checking accounts, respectively. That’s a creative way of saying that they’re going to charge you if you deposit more cash than that. Another big bank, JPMorganChase, charges after $10,000 in cash deposits per month. Wells Fargo also charges for cash deposits beyond a prescribed limit.

That having been said, of course choosing the best bank for your business checking is a very personal decision. We’re all too busy and convenience is appreciated – maybe you want a bank with nationwide locations and ATMs, as M&I has. Moreover, the bigger banks tend to offer more ancillary services that small law firms might benefit from, such as payroll services, investment products, merchant credit-card processing or lock boxes. Again, M& I’s got many such services.

Safety first

You have enough to worry about. Stability is important.

I don’t mean to pick on M&I, but in May, it was listed as one of the 20 largest U.S. banks that are most likely to fail. BIzTimes.com reported that Weiss Ratings gave M&I a “D,” or “weak” grade. Martin D. Weiss, chairman of Weiss Ratings, notes in the article that “most of the strongest banks are relatively small and have fewer branches.”

I’d be shocked if M&I failed, but the report does give me pause. On the other hand, a smaller institution, First American Credit Union in Beloit actually did shut its doors on Aug. 31.

To find out about a bank’s stability, check out its “safe and sound” rating at Bankrate.

Consider a credit union

Credit Unions serve a defined field of membership, and eligibility may depend upon affiliations you already have through an employer, organization or church, while some are based solely on geographic area. They don’t all offer business checking, but many do.

The UW Credit Union, in Madison, Milwaukee, Whitewater, Stevens Point and Green Bay, for example, is open to anyone who lives, works or attends school within five miles of one of its branches, is a UW System or Madison Area Technical College student past or present, a UW Health employee past or present, or a family/household member of someone who fits that description. That’s a lot of us.

Another attractive feature of credit unions is they may be more likely to give you a loan. In the March 3, 2009 Wall Street Journal, Kenneth Beine, president and CEO of Shoreline Credit Union in Two Rivers said his credit union “has seen more ‘Main Street loans’ coming to them as traditional sources have dried up.”

First impressions count

When I called Bank Mutual to ask about the “Business 50 Checking” it advertises on its website, I was routed to the commercial banking voicemail. I’m sorry, but when you have 78 locations throughout Wisconsin, and someone calls during regular business hours to ask about one of your products, you should always have someone available to answer those questions. Period.

It’s a relationship business

Some people say they don’t like lawyers or politicians, except for their own lawyer or representative. That’s probably true for bankers, too.

So, find an institution, and more importantly a banker, with whom you can form a solid, long-lasting business relationship. When you “interview” a bank, ask for the manager and make that connection. He or she is the person you’ll complain to, if and when your bank assesses a charge you don’t like.

Pribek’s Picks of Financial Institutions for New Firms

If I were starting a solo practice or small firm in Wisconsin today, these are some of the institutions I’d be investigating.

None of them charges for paper statements or cash deposits, and there’s no charge for in-person transactions. They don’t all participate in IOLTA, however, and most of these accounts aren’t interest-bearing.

Disclaimer: These are just my opinions, not those of the Wisconsin Law Journal, and I’ve only scratched the surface — with more than 300 banks in Wisconsin, I couldn’t check them all out.

1st National Bank, with its central office in Berlin and seven other locations, mostly in the Fox River Valley, offers “Free Business Checking” with no monthly fee and no transaction fees until 50 items. And, when I called, a person picked up the phone and promptly answered my questions. Guess I’m old-fashioned, but I liked that.

Guaranty Bank is headquartered in Milwaukee, but has 169 locations in five states, many of them in grocery stores. Anyone who multitasks (usually working moms like me) can appreciate the convenience of making the day’s deposit and picking up something for dinner in the same stop.

I did encounter a little touchtone hell when I called, but to the service rep’s credit, she acknowledged and apologized for that.

Guaranty offers as its best deal “Totally Free Business Checking,” with no monthly maintenance fee or transaction fees and no minimum balance, other than the $100 to start the account – a minimum all banks seem to require. You need to have another account with Guaranty to qualify, such as personal checking.

The Equitable Bank, in Milwaukee and surrounding communities, offers totally free checking, with no monthly minimum balances or fees and no transaction fees. There is a $5.95 monthly charge for online bill pay – boo to that. But maybe I could suck it up as part of an overall package if it best fit my business model. IOLTA accounts are available.

State Bank Financial, based in La Crosse and in four locations in Western Wisconsin, and La Crescent, Minn., offers “Business Simplifier” checking, with no monthly maintenance fees and free transactions up to 200 per month. There’s a $9.95 per month online bill pay charge, but again, that wouldn’t necessarily be a deal-breaker. IOLTA accounts are available. A human being answered the phone here, too.

The UW Credit Union offers “Business Checking” with no monthly fee and no minimum balance. Up to 50 checks can clear, and 50 checks may be deposited, per month without a transaction fee. After that, it’s 30 cents per transaction. There’s free online bill pay. Plus, it pays “dividends” on average collected balances of $5,000 or more. With some of the other “picks,” I might graduate to other plans or banks once the firm’s cashflow increases, but that last feature probably helps the credit union keep a few more start-ups once they’re past the initial phases.

I did endure about a 10-minute wait on hold, unfortunately.

On the Web:

M&I listed as one of 20 largest banks most likely to fail

Bankrate’s “safe and sound ratings”

Wall Street Journal: Small Businesses Find a New Source for Funding

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