What the USAA ad didn't mention
"pfblog reader" left a few comments and questions on an earlier post ("Bait and Switch: USAA Federal Savings Bank"). Despite the fact that USAA is raising fees as much as 400%, he or she seems to be supportive of USAA. He/she suggests there may be a very good reason for raising the photocopying fee from $1 to $5:
Does USAA offer electronic access to scanned checks and past statements? If so, then maybe the copying fee is sort of a discouragement to prevent people from asking USAA to do something that the customer could just print off the webpage? In that way, I can see why the statement copy and photocopying fees are that high. I would imagine that it is not because photocoying something costs $5, but that they have to hire someone to do this [obsolete?] job ...Interesting, but that doesn't make much sense, as customers are sent printouts of their statements and cashed checks every month, and they are free, at least for the type of checking account I have. Of course, there must be some reason behind USAA doubling and quadrupling fees, but they did not explain it in any of the documentation I was sent.
The comment by pfblog reader brings up another point, about the marketing material that highlighted the features of the accounts:
I didn't see any of the adverts that touted the low fee checking accounts--did they publish the old fees (for statement copies, etc.--the ones you listed in the post) as examples of these low fees? If so, then that does seem like bait and switch. Most of the "low fee" checking account adverts I've seen, though, tout the low fees associated with minimium balances, electronic bill pay, and stuff like that. If they didn't cite these as specific examples, then I'm not so sure the bait and switch argument is as strong. If someone didn't even know what the cost was before, then maybe they don't care about it or at least it didn't "bait" them into signing up for the checking account. Right? If you don't see the bait, then how can it bait you?Hmmm. What exactly did the advertisements say about low fees, back when I signed up? I went into my basement, and dug out last year's bank paperwork to examine the marketing material that USAA used to lure me and other USAA members to register for Federal Savings Bank accounts.
And you know what? It turns out the advertisement didn't say anything about low fees.
It said "no fees".
That's right, no fees. Not "no fees" with an asterisk, or "no fees, except for certain types of bank services." No fees, period. Here's the text of the advertisement, which is featured on page 4 of a little booklet entitled "Your Guide To Banking at USAA":
Put your money to workThere are then nine bullet points describing some of the features of the account, and urging people to sign up. Only one of them mentions fees:
Checking. Pay no fees, optimize cash flow.
You'll never need to change accounts again. Our no-fee checking account will follow you no matter where you live or travel. Enjoy no monthly service fees, no minimum balance requirements and unlimited check writing privileges.
Automatic refunds every month on fees other banks charge for using their ATMs.This bullet also refers to some fine print at the bottom of the page, which says "No charge for the first 10 ATM withdrawals at non-USAA ATMs per monthly statement cycle; additional withdrawals are $1 each. USAA Federal Savings Bank will refund up to $15 for ATM surcharges incurred per account, per statement cycle."
Still, there is no fine print talking about photocopying fees or any other fees. I am sure a lot of people read that and said -- "Sounds great, sign me up!"
But wait. On page 16 of the booklet there is a "Service Fee Schedule". Are these applicable to the checking account? It's not clear. There is no reference to these fees on the page 4 advertisement, nor is there any indication on page 16 about which accounts the service fee schedule applies to -- there is USAA savings account, CDs, and IRAs described in the booklet.
So, pfblog reader, there's the bait: A bank account that's described as "no-fee checking", but actually has fees, which seem to rise very significantly every once and a while.
Notably, the USAA Web site still describes this account as "No Fee Checking," and the fine print on that page does not mention the service fee schedule. If I were USAA, I'd think about changing the name of this account, making the presence of fees very clear to prospective customers, and taking a hard look at how new services are marketed to members. Customers don't like being misled. Deceptive advertising, and unexplained major fee increases are resented by customers. If repeated, they could erode USAA's status as one of America's most trusted companies.
Caveat emptor!
Related Posts:
Bait and Switch: USAA Federal Savings Bank
USAA responds to Fidelity Observer with a playground insult
A corporate partnership that's useless for consumers
BOA customers beware: More nickel-and-diming ahead!
Read this post on the PFBlog.com/fidelityobserver mirror -- Reader comments often appear there that won't show up on this page. You can leave comments on either page, I'll read 'em all!
posted by ian @ 12:22 AM
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9 Comments:
For ALL THE BASIC SERVICES OF THE ACCOUNT THERE ARE ANY FEES, NO FEE TO MAKE A DEBIT PURCHASE, THE OVERDRAFT FEE;S ARE THE LOWEST I'VE SEEN AND USAA IS MOST CERTAINLY THE MOST LENIANT AT REFUNDING THOSE FEES. THERE IS A THING CALLED ELECTRONIC DOCUMENTS WHICH CAN BE STORED ON THE WEBSITE FOR UP TO 2 YEARS FOR FREE, AND YOU COULD SAVE THOSE DOCUMENTS DIRECTLY TO YOUR COMPUTER HARD DRIVE OR TO A DISK AND MAKE ANY AND ALL CHECK OR STATEMENT COPIES YOU WANT. AS FOR RAISING THE FEES FOR FED EX, YOU SHIP SOMETHING FROM FED EX NEXT DAY IT'S GOING TO COST YOU MORE THAN WHAT THEY CHARGE. HOW ABOUT THE INTEREST YOU CAN EARN ON A CHECKING ACCT, HOW ABOUT THE 1/2% CASH BACK FOR CREDIT PURCHASES, FREE WEB BILL PAY, FREE UNLIMITED TRANSFERS TO ADN FROM OUTSIDE OR NON-USAA ACCTS. NO FEE FOR A CREDIT CARD CASH ADVANCE, MOST OFFICAL CHECKS THAT MEMBERS RQST ARE FOR HOME CLOSING SITUATIONS AND IF THAT PERSON WAS TO MAKE A WIRE OF THOSE FUNDS IT WOULD BE $20 NOT $5, OR IF THEY DIDN'T USE USAA TO GET THE CHECK BUT GOT IT FROM ANOTHER INSTITUTION OR CHECK STORE THE FEE WOULD BE A CERTAIN PERCENTAGE AND WOULD MOST LIKELY BE HIGHER THAN $5. I HAVE HAD BANK ACCOUNTS FOR MANY YEARS WITH WELLS FARGO, COMERICA, CHARTER ONE, ARIZONA FEDERAL CREDIT UNION. USAA HAS BY FAR BEEN THE BEST BANK EVER, I HAVE MY LOAN MY CREDIT CARD, MY DAUGHTERS SAVING ACCT, MY CHECKING AND SAVINGS ALL THORUGH USAA. DESPITE FEES FOR CERTAIN THINGS, SOME OF WHICH CAN BE AVOIDED, THERE ARE NO FEES AND IT'S THE BEST DAMN ACCOUNT I'VE HAD.
I don't dispute that most fees can be avoided, but my main problems are:
1) USAA described it as a "no fee" account in the original marketing material, and
2) They've raised fees up to 400%, and never gave any reason for doing so.
It's $5. Who cares? You act as though a 400% increase from $1 is significant. $5 won't even get you 2 gallons of gas anymore.
QUIT WRITING IN ALL CAPS, YOU USAA-PAID BLOGGER!!!
Seriously, are you so lazy that you fail to know when and where to use proper capitalization and punctuation? Oh, sorry, you work at USAA - you probably are still working on your G.E.D.
Here's one reason for the fee increases, which was not mentioned in any of the previous posts: increases in salary and other perqs for executives, as well as paying legacy labor costs, such as pensions for retired employees. What am I talking about?
To begin with, USAA maintains two corporate jets - both Gulfstream 5s, worth around $50 million apiece. If this sounds extravagant, it is; mostly executives but sometimes lower-level employees get to use the corporate jets when a simple ticket on Southwest would do. Executives also receive country club memberships and a fat year-end bonus (anywhere from 50 to 100% of their six-figure salaries, unlike the working-class everyday employees, who get 12 to 15% at best).
Second to the insane salary costs are the legacy retirement costs that USAA is paying and will pay, though they did force retirement on several hundred employees about 7 years ago. But once you have been an employee for a minimum of 5 years, you are entitled to a pension, equal to 1.5% of annual salary for each year employed. So once you hit that 5 year mark, you're guaranteed to bank 7.5% of your salary when you retire. Not bad for a company that claims to put "members" ahead of all else.
Yeah, the customer service may be rated high compared to other companies, but don't forget that it's all subjective - when you compare USAA to BofA, USAA comes across as divine! You can get great customer service from a brow-beaten coolie on the streets of Bangkok, which is about the same kind of working environment you will find at USAA in the call centers.
So, here is one more explanation (really two) as to why USAA is raising its bank rates. Decide for yourself if this Jim Jones definition of "service, loyalty, honesty, integrity" is what you want to reward with your hard-earned dollars, especially if you're in the military. Too bad there's no regs around conduct unbecoming a USAA officer because there is plenty of misconduct at that company to go around.
It's not only rude and insulting that you would suggest the employees hired at USAA are not educated, well spoken, and spoiled, but incorrect. Ask me how many times I have been on that company jet. (Here's a hint: less than once.) The fees are insignificant. The customer service we work so very hard to give day-in-day-out goes underappreciated. Not only is it overlooked by [most in] management all the way up, but also by members who bitch over a $5.00 fee. Maybe that extra money will go to my raise next year so that I may rise above the poverty level. Perhaps I will use it to get a proper edjumakashion.
Oh by the way to the blogger that assumes that he knows so much about USAA....our "entitled" retirement pension was taken away!
I can approach this from three different perspectives: I've been a USAA member for over 35 years; I retired from the banking industry (not USAA) after 30+ years; and my wife is a USAA employee on the banking side (for three years).
As to the fees charged relative to the so-called "no fee" account -- it's unreasonable and naive to assume the term "no fee" is inclusive of all checking account-related fees imaginable. No fee for wire transfers out of that checking account? No charge for an NSF check? Of course not!
Nor do I believe USAA owes an explanation everytime they increase a fee. Prices for goods and services increase from time-to-time for any number of reasons. That's the world we live in. We don't expect the grocery store to share their reasons to justify the price hike on a loaf of bread, or a gallon of milk. If we don't like it, we can vote with our wallets: we can chose to pay it, or shop elsewhere, or simply quit buying bread.
As was mentioned, USAA provides good web-based support, including full on-line access to documents related to any product or service one might have with them (including the ability to archive and/or download same). I'm confident the fee structure in some cases is designed to be "punitive;" that is, to discourage members from relying on employees for things the member could easily do for themselves, e.g. photocopies. Kind of like the NSF fees all banks charge -- it doesn't cost that to process an NSF check, but the high charge is to discourage people from bouncing checks.
And to be honest, fee income has become a large part of banks' revenue stream (the NSF fees are BIG money). As a consumer, I agree it's gotten out of hand in some cases, but it is an industry-wide phenomenon that's not going to change anytime soon.
When viewed as a whole (rather than isolating on a single fee here or there) and compared to the rest of the industry, I consider USAA to be among the low-cost providers.
Not perfect, but they've always treated me well -- and having been a "banker guy" myself, I'm a pretty tough audience.
Mr. Banker, sir (with the wife who has worked at USAA for 3 years):
Who, exactly, owns USAA Federal Savings Bank?
Also - if you are a subscriber to Lord Alfred Keynes maxim about "there being no free lunch", whose paying for all the largess evidenced at the bank?
USAA owns the bank. USAA doesn't have any shareholders, so they are not obligated to squeeze every penny out of every account/transaction. They certanly have to stay in business, and I think those fees are indeed "nusance" fees to encourage behavior. I've had many bank accounts around the country, and I'll say that USAA's fee structure is probably the best I've encountered.
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