Consumer Watchdog: The Traps of the Santander extra20 Checking Account

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Updated on Wednesday, November 19, 2014


Santander is promoting its ‘extra20’ checking account” deal pretty heavily.

You just have to…

  • Set up direct deposits of $1,500 or more each month (earn $10)
  • Pay two bills with online BillPay each month (earn $10) – you can even set them up automatically

That’s $20 each month, and the $10 monthly fee is waived when you do $1,500 or more in direct deposits.

But Santander would lose a lot of money if everyone made $240 a year from their checking account.

The Traps

Here’s where they’re hoping to trap you, and unfortunately the traps are set to punish people who can least afford it:

Paying $6 or more for ATMs

Santander charges $3 for every transaction you make at a non-Santander ATM. That’s on top of whatever fee the host ATM charges, which is often $3 or more. Make a few out of network withdrawals a month and you’re quickly out $18.

Rough overdraft fees

You’ll be hit with $35 if you overdraw your account and don’t have it set up to link to your savings account. And even if you do link up your savings account, they will charge you $12 every time they have to sweep money from savings to checking to cover any overdrafts.

One of those in a month and you’re close to being in the red.

A monthly fee

Miss two months of $1,500 direct deposits in a year and you’re out the $10 bonus each month you miss and get slapped with a $10 fee each month. And you’ll most likely face that if you lose a job, when you can least afford it.

The good news is you have two months to setup your first direct deposits before a fee is charged, but even that’s not a guarantee. Setting direct deposit takes time and effort, and life gets in the way.

Low savings rates

The $20 bonus you earn each month must be deposited in a Santander savings account. And while Santander offers a generous 0.9% APR on its Money Market savings account, you need to have at least $10,000 in your account to get that rate. Otherwise you’re stuck earning a low rate.

What’s a better alternative?

If you think you might slip up (and most people will at some point, or Santander wouldn’t offer this), then consider another online checking account like Bank of the Internet USA, which offers full reimbursement of all ATM fees, and never charges an overdraft fee.

Ally Bank also lets you use any ATM in the country free of charge, and charges just $9 for overdrafts, and nothing if you have a savings account linked. And Ally pays 0.9% on savings accounts with no minimum balance, so you don’t need $10,000 in your account to earn a fair rate.

Who is this for?

If you have steady income, don’t ever overdraft, and are willing to put up with the inconvenience of only using Santander ATMs, then the Santander extra20 can be a good deal.

But if you value the freedom to use other ATMs, or have the possibility of going overdraft more than a couple times a year, avoid this account. There are better deals from Internet-only banks.

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