Checking Accounts

Just days after their son was killed by a Taliban rocket while serving in Afghanistan, Steve and Joy Retmier went to Downey Savings and Loan in Hemet to deposit two government bereavement checks to help pay for his funeral. But once inside, they said, a teller put a hold on the checks for 10 days until they could be authenticated. The funeral was in five days.

The humble checking account, long overshadowed by sexier and higher-risk investment vehicles, may have a key role to play in the revival of the nation's gasping financial system. Banks and other financial companies got into trouble by betting their futures on exotic investment vehicles like "collateralized debt obligations" and securities tied to high-risk mortgages.

Washington Mutual Inc., which has made free checking a cornerstone of its marketing campaign, is about to start imposing a $5 fee on noncustomers who come into a branch and cash a check drawn on a WaMu personal account. In other words, let's say you're a WaMu customer and you write a $30 check to your buddy Bob for his collection of vintage Peter Frampton records. If Bob, who doesn't have a checking account, cashes the check at his local WaMu branch, he'll only get $25. WaMu would keep $5.

You could be in for higher fees if you don't keep an eye on your checking account. Fees for bounced checks and withdrawing cash from an out-of-network ATM rose again this year, according to a survey released Monday by Bankrate.com. The average cost of using another bank's ATM is now $3.43, while a bounced check now costs an average of $28.95, up 2.5% from a year ago, according to the survey. The good news is that avoiding such fees is easy.

Richard Kesterson slid his debit card out of his wallet even before the cashier at a Hy-Vee grocery store in west Omaha rang up his total. Kesterson, like millions of Americans, didn't even consider paying by check. Using a debit card is easier, he said. Kesterson also eschews checks when paying his bills online, and then lets his bank keep track of his spending. "I haven't balanced my account in 10 years," Kesterson said.

Consumers are paying huge fees on short-term loans that cover them when they overdraw their checking accounts, under programs that banks and credit unions often enroll customers in without their knowledge, a new study says. Fees to cover overdrafts are taking advantage of Americans' rising use of debit cards to make even small purchases, the Center for Responsible Lending said in the study released on Wednesday. Debit cards typically draw directly on consumers' checking accounts.

As a glut of global capital gave way this year to a financing drought, Bank of America Chairman Kenneth Lewis was on the watch for deals. Bank of America, with one-tenth of all U.S. bank deposits, had plenty of money. Lewis saw that there might be a chance to buy into smaller financial companies that had been hit by rising mortgage loan defaults and other problems. "Ken had told people for several months to be on the lookout," BofA spokesman Robert Stickler said.

Being poor is hard enough. Having to squander what little money you have on payday lenders, check cashers and other high-cost financial services only makes matters worse. For too many Angelenos, when it comes to managing money, that's all they know and sometimes all they have access to. Life without banks, and the knowledge to use them, is costing them and the rest of us too much.

Wells Fargo & Co. announced Tuesday that it had settled a lawsuit over check-cashing fees by agreeing to make it easier for employees of small businesses to qualify for free checking accounts. The suit, filed by Chaffee Enterprises of Bakersfield, a paging services company, alleged that Wells Fargo's policy of charging non-customers $5 for each check cashed violated a 1911 California labor law that requires employers to provide a place where workers can cash paychecks for full face value.

Bank of America Corp. must pay at least $372 million in damages and interest to hundreds of thousands of Californians, a judge has ruled, saying Social Security funds in their accounts were seized illegally to cover overdraft and bounced-check fees.