Shopper’S Guide to Dallas Banks

“Not all aspirin are alike…” That is, some brands have fatter advertising budgets, prettier packaging and charge more than others.

In the same way, not all Dallas banks are alike. Some banks have fatter advertising budgets, prettier packaging and charge significantly more for services provided by others at lower costs.

It makes sense to shop for a bank in the same way you shop for a car, a house or insurance. Once you begin nosing around, the differences in costs for basic banking services like checking and savings accounts, loans, etc. can be astounding.

Examples: A used car loan at NorthPark or Casa Linda Bank will cost you 12.02 per cent (APR); at Merchants State Bank, a hefty 14.67 per cent (APR). That’s a 2.65 per cent difference, and on a two year car loan of several thousand dollars, it can mount up.

Metro Bank will give you a free checking account for maintaining a mere $500, and First National in Richardson will allow you to write checks free if you agree to keep $700 in your savings account; on the other hand, Valley View, Main Bank and Brookhollow ask only a minimum balance of $100 for free checking.

Savings accounts, unlike checking accounts, are always free. They represent money you’re loaning to a bank. Ostensibly, a bank can only pay 5% for your benevolence. In reality though, the effective yield you can earn depends to a great extent on where you bank.

Shopping for a savings account, you’ll inevitably run into the loboto-mized litany of the new accounts person. “The Federal Reserve limits the amount of interest that any bank can pay on its savings accounts to 5%. That bank down the street can’t pay you any more than we can – so you might as well bank here as there.. .”

To a degree this statement is true: the Fed does prohibit banks from paying more than 5% on passbook savings. The more competitive bankers, though, really do want your business, since your savings deposits are one of the cheapest sources of money available. To this end they’ve devised several ingenious methods for paying you an annual yield that is substantially more than 5%, while staying within the letter of the law. The more competitive banks both compound and pay interest daily, and they figure it from date of deposit to date of withdrawal. Some even give ten days of free interest each month. They’ll pay interest retroactively, from the first of the month, if you deposit your funds by the 10th of the month.

When you take all the variables of interest calculation into consideration, there can be up to 171% difference in the amount of interest you earn over a year’s time from two accounts that start with the same balance and pay the same rate of interest.

Unless you’re seriously into corporate charity, it’s best to bank somewhere that figures the interest from date of deposit to date of withdrawal. For example, if you deposited $10,000 into a standard 5% passbook savings account at Texas Bank on December 11th and withdrew it on December 30th, you would have earned $27.40 of interest for the twenty days it was on deposit. If you had deposited this same $10,000 into a similar 5% savings account at Oak Cliff Bank on December 11th and withdrawn it on December 30th, you would have earned no interest at all. Oak Cliff Bank only pays interest on funds that are received by the 10th of the month. A penny saved is not necessarily a penny earned.

This “Shopper’s Guide to Dallas Banks” is designed to help you cut through all the advertising hype and figure out who’ll charge you the least for the services you need.

Checking Accounts

The charges made for checking accounts vary widely. The most common method for assessing these charges is by requiring that you maintain a certain minimum balance. Each $100 in minimum balance represents $5 worth of interest you’re giving the bank. Valley View and Main Bank require only $100 in minimum balance; hence, free checking is costing you only $5 per year. Banks such as Inwood and Citizens National that require $500 minimum balance are effectively charging you $25 a year for free checking. A $1 service charge is usually assessed for each multiple of $100 that your balance dips below the minimum.



Another common way of figuring checking account service charges is the flat rate method. The best example of this method is found at Casa Linda Bank, where you pay a flat fee of 10c per check. There is no minimum balance to contend with and no other service charges. If you write fewer than 50 checks per year, the flat rate method costs you less than the cheapest minimum balance method.



The third and most complex method for assessing checking account fees is the activity plan method. Many of these “activity plans” seem to have been devised by crazed cost accountants anxious to get back at society. The basic idea behind these plans is to allow you a given number of free checks each month, depending on your “average balance”. After writing more than the allotted number of free checks (which is an easy thing to do), you are charged on a sliding fee schedule that has so many caveats and provisos that a systems analyst would be hard pressed to understand it.



Mercantile is a prime example of this cost accounting wizardry. If your balance is between $251 and $350 you get to write eight free checks (a balance like this gets you free checking at most banks). Your ninth check costs $1.05. Why $1.05? Who knows? Your tenth check costs only 7c, as does each check thereafter. If your balance is between $351 and $450 you get 13 free checks (overwhelming, eh?). Your 14th check costs only $1.04 though. Have fun checking your bank statement!

The ultimate checking account plan is found at Metro Bank across from the Fairmont. Free checking is your for maintaining only $500 in your savings account. It takes $100 to open the checking account and after that there are no service fees or minimum checking account balances required. North Dallasites enjoy the same opportunity for free checking by banking at the First National Bank of Richardson. This bank offers free checking for a minimum savings balance of $700.

Savings Accounts

From the consumer’s point of view, the ideal savings account would compound interest daily. Interest should also be payable daily instead of quarterly. (What good is it to have your interest compounded daily if you are not allowed to draw it out until the end of the quarter?)

In addition, the best savings accounts always offer “grace days.” In other words, you can deposit your funds up until the tenth of the month and earn interest retroactively, from the first. The bank is in effect giving you ten free days worth of interest and boosting the true yield on your account. They’re paying you interest on funds they never had. One word of warning, though – many of the downtown banks flip over into a new accounting day at 2:00 p.m. If you come in at 2:10 p.m. on the tenth day of the month, you’ve lost the ten days free interest. If possible, try to receive your paycheck on the ninth or tenth of each month and deposit it that day.

Another method for increasing the yield on a savings account is to make sure that interest is computed on a 365 day year. For some inexplicable reason, many banks seem to think there are only 360 days in a year. Hence, they pay interest on your savings account for only 360 days. The other five days are what are known as profit.

Practically every bank in Dallas limits the number of withdrawals that can be made from a savings account. The average number of free withdrawals is about one or two a month, after which you’re usually stuck with a $1.00 fee. The rationale for this practice is that savings accounts shouldn’t be used like checking accounts. However, a few banks like First National in Richardson and Brookhollow impose virtually no withdrawal limits. It seems only fair that you be allowed to make a reasonable number of withdrawals (i.e., more than one or two) from your own account. After all, it is your money.

Services

The loan is the primary service provided by most banks. And with inflation soaring at an annual rate of 12 per cent, installment loans suddenly acquire a certain seductive charm. It makes good sense to buy something right now on credit and repay your banker in currency that is worth one per cent less with each passing month. The alternative is to defer your purchase and pay at least 12 per cent for it next year.

This guide provides a good overview of which banks offer the lowest loan rates. Remember that the APR’s quoted by a given bank should not be regarded as totally inflexible. A loan officer normally has a “permissible range” of APR’s that he is allowed to offer, depending on your credit rating, savings account balance and appearance. Go ahead and haggle for a lower rate – all he can do is say no.

Aside from the wide variance in interest rates, you will note most other variables concerning loans do not vary much among Dallas banks.

Other services: All banks surveyed have drive-in windows, except United National, downtown’s newest and most elegant bank. Oak Cliff Bank, in fact, has 24 drive-in windows, reputedly giving it the largest drive-through banking capability in the world. Operating hours for drive-in windows range widely: Bank of Texas keeps its windows open from 7 a.m. to 7 p.m. weekdays, and from 9 to 4 on Saturdays. Mercantile’s windows, on the other hand, are open only from 9 a.m. to 2:30 p.m. Monday through Thursday and until 4:30 p.m. Fridays, which makes it a little hard to cash a paycheck either before or after work.

Saturday banking is a service not embraced by many Dallas banks. NorthPark, Valley View and the Bank of Texas are open on Saturdays. Other banks are trying to circumvent the Saturday banking problem with 24-hour automatic teller machines. Most banking transactions (except check cashing) can be consummated any hour of the day or night, seven days a week with automated tellers. Most are capable of transferring money between savings and checking accounts, receiving loan payments and even disbursing cash (normally with a maximum limit of $100 withdrawal per day per account).