Bank Fees: How I’ve cost my old HSA provider greater than $2.50 per month
Health Savings Accounts, created in 2003, have been a great way to reduce health care costs of employers and employees the past 6 years. When my previous employer added them to their benefits offerings, I immediately signed up for a HSA plan. Now only did it lower my health care costs but it helped reduce my tax liabilities. Throughout my time at the previous employer, the HSA plan administrator was changed once or twice. The current plan administrator when I left was a bank by the name of FirstHorizon. When I left for a new job in January of 2009, one of the benefits of the HSA was being able to take that account with me. Little did I know what was in store for me now that I have left my previous employer.
The Scenario
After going through some health issues in 2009, I wanted to use the remaining balance of my FirstHorizon HSA account and be done with it. I called the medical office who I owed money to and asked them to charge a specific dollar amount to my FirstHorizon HSA account. The medical office charged the requested amount and I thought all was well until one day when I came home and received a letter from FirstHorizon stating my account was overdrawn.
“Great…how’d this happen…” I thought to myself. Well it turns out ever since March or April, they had been charging me an account maintenance fee of $2.50 a month. I did not factor this in when I told the medical office to charge a certain amount to the account. The first thing I did was call and request the overdraft fee be waived. Surprisingly, they waived the $35.00 overdraft fee. Which left my account still $2.50 in the hole. So I asked if they could take a deposit over the phone. The customer service rep told me that this wasn’t possible and I would need to do it online or send a payment in.
Not wanting to pay for a stamp, I access my account online and link it to my checking account. Unfortunately, FirstHorizon’s systems need to verify deposit amounts before linking external accounts to their systems. This took 2 business days. After verifying my account, their systems then force me to transfer a minimum of $20.00 into the account. In between waiting for my account to be verified and depositing money, FirstHorizon decided to charge me a second overdraft fee. It was quite ironic actually because the day my deposit to the account went through was the day that the overdraft fee hit. I then proceeded to call FirstHorizon again and ask for the second overdraft fee to be waived. Again, to my surprise, they waived this fee. During my second phone call, I asked how this account can be closed. It turns out I need to send something in writing via fax or letter to request closure of the account. After the second fee was waived, I decided to send my fax request in to close the account. As part of my request, I asked that any account closure fees be waived. Now that you’ve heard the situation and are somewhat familiar with the fees FirstHorizon tried to charge me, I think its important to talk about fees and costs.
Bank Fees and Costs
In my story, I talk about paying a monthly maintenance fee of $2.50 per month. When I was with my previous employer, my guess is that they were paying this fee on behalf of their employees as part of giving the business to FirstHorizon. Now I would be very surprised if they were paying $2.50 per person, my hope is that this fee would be much lower for having a certain volume of business. As I was talking to a friend about this situation, I realized that my database record in FirstHorizon’s IT systems could in no way cost $2.50 per month especially if I never talk to Customer Service. This fee, as most bank fees are, appears to be a pure profit generating fee for FirstHorizon. Even with all the aggregate IT and HR costs, there is no way my record in their database costs $2.50 a month. At most it probably actually costs something closer to 30-50 cents a month.
So let’s do a little estimating of what the situation actually cost FirstHorizon. First, you have the hard costs of the waiving of the overdraft fees. These overdraft fees are pure profit for the bank. Usually they will give you at least one fee waiver a year. So in terms of hard costs, that was $60.00. In terms of soft costs, I had to talk to 3 different customer service representatives (I didn’t dial the right number the first time.) and 2 requests had to be escalated to supervisors. The normal CSRs probably make $8-10/hr. Even though I wasn’t on the phone with them for more than 15 – 20 minutes, I am sure there is additional paperwork they need to fill out to forward my request to their supervisors. Additionally, that 15-20 minutes of time I was taking up could have gone to someone who actually required help from the bank. So factoring in 1 hour of work from normal CSRs and 30 minutes of work from the supervisors. For purposes of labor costs, I will assume supervisors probably make $12-15 a hour. From a labor cost perspective that’s $24-30 for the CSRs and $12-15 for the supervisors. Just from these costs alone, the total comes to $96 – $105 for this incident. This does not even account for maintenance costs or cost of the phone call.
I understand the reason for charging account maintenance fees as an attempt to recover the costs associated with an account. What I don’t like is the fact banks use these as a pure profit center and not as a cost recovery center. If you’re going to charge a fee, charge what it actually costs you and don’t try to fatten the bottom line through your fees. As you can see from my story, in the end, it cost FirstHorizon much more to deal with my situation than the fees they have recovered through their “account maintenance” fee.
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