How Do You Raise Fees without Raising Anger

Ask a few questions about service charges and you unleash a flood of wide-ranging opinions. For example, Richard Carlander doesn't believe in assessing a lot of fees. Maybe you pick up a few dollars, but are you irritating the customer? Is he or she going to go elsewhere and take money out of the community? asks Carlander, president of $115 million-assets State Bank of Faribault (Minn.) He prefers to charge a quarter or half percent above prime on loans than to nickel and dime people. go to ball games and to church with these people. We don't want to be shoving all these charges down their throats, he says. Ed Cook, however, has fewer compunctions. you pay interest on all of the money that you're working with, the corollary to that is you have to charge for services, says the president and CEO of First State Bank, Gothenburg, Neb., $49 million in assets. Each thing pretty well has to stand on its own, says Cook. But to make that acceptable to the public is very difficult. a major balancing act. so in West Monroe, La., where all the banks are raising their fees and customers are accepting it, according to Clyde R. White, president of $100 million-assets Louisiana Bank. Not many years ago, people thought you shouldn't charge them anything for a checking account because you were using their money, says White. Now no bank around here gives away free checking to anybody. Banks are realizing they can't afford it and customers are realizing that the banks and savings and loans that did that have gone out of business, so they know it's a matter of survival. If the bank can't make a profit, it's not going to be around to serve them very long. Louisiana Bank sends out a flyer on service charges every time they are changed, which is about every other year. White says virtually no one calls to question or complain about the new fees. Fees that backfire Sympathetic customers are not universal. It's difficult to know how the customer is going to perceive these things, says Cook at First State Bank. tried charging commercial accounts when they deposit a check that has to be returned for insufficient funds. Our commercial customers went through the roof, he says. It doesn't make any sense to me, because they in turn charge a fee to the customer that gave them the check. Yet the bank removed the fee. Cook finds that customers accept fees they consider reasonable and within their control, such as overdraft fees. Yet they do not like fees for not maintaining minimum balance levels, even though they are within the customer's control. we get a complaint about something, it's the person who hasn't been overdrawn before and then all of a sudden they are and they get zapped, says David Grewe, senior vice-president at State Bank of LaCrosse (Wisc.--$155 million in assets). They're not used to it and it hurts them. They also don't like the fee we charge for paying a check instead of returning it. They don't understand the work involved. Older people tend to be more sensitive to fees than younger people, bankers say. That's why many banks offer free or discounted accounts to their mature clientele. Explain carefully Like any kind of bad news, the way people react to a new or raised fee depends partly on how they're told. Regulation DD (Truth in Savings) and other regulations require notification of some service charges, but some banks go beyond that, sending letters and brochures that clarify the changes and explain why they're necessary. When First State Bank in Gothenburg introduced a foreign automated teller machine usage fee, it sent a letter to all ATM card holders. …