Paying the Burrito Tax

It’s only a small fee, right?

Photo credit: Steven Depolo, CC BY 2.0.

I walked into the credit union on a Saturday morning. I already had a long-standing savings account, but after moving to a new town I wanted a local checking account to avoid ATM fees. Other than choosing a credit union over a bank, I’d done zero research about my options.

Should We All Switch To Credit Unions?

“We have two options for checking accounts,” the banker said. “One is fee-free checking. There are no monthly fees, free online bill pay, no ATM fees. It’s basically free if you choose online statements instead of paper.

“The other option, our interest checking, rewards you for being responsible. The money in your checking account earns a small amount of interest, like a savings account. Just like the other option, there are no fees… unless your balance drops below $500.”

I’m a sucker for small cash incentives and I love a bargain. Keeping a bigger cushion in my checking account sounded like a great idea in any case. Avoiding the fee — an $8 fee, as it turned out — would encourage me to save.

“I’ll take the interest checking!” I said. I deposited $800 and walked out with an ATM card.

My statement for the first month included my interest deposit. With .02 percent interest, my checking account earned all of 1 cent.

Oh well, I thought. Earning a penny is better than earning nothing at all, and at least I’m keeping that $500 cushion.

Over the next six months, I kept earning pennies. I also kept spending.

I get my paycheck at the end of the month, and I started keeping a very close eye on my checking account to make sure it stayed above $500 until my paycheck dropped. If the balance was getting close to the wire, I’d hold off on spending to avoid the fee.

“Eight dollars!” I’d say. “That could buy a Chipotle burrito, with guacamole even.” I started to refer to “The Burrito Tax” when watching my spending.

On the seventh month, a cold March, I looked at my statement and saw I had paid the burrito tax. A higher-than-usual heating bill had hit my bank account on the last day of the month, when my funds were at their lowest.

This was not ideal, but in the grand scheme of things it was just a burrito-sized mistake. I resolved to keep a bigger cushion and avoid paying it again.

The interest kept coming in. Some months, I even earned two pennies.

Then I paid the burrito tax again when I had to pay a deposit to the caterer for my wedding. This took my account well below the $500 cushion. Weddings have a funny way of getting to your bank account, and mine didn’t recover for the next six months. I paid the burrito tax many more times. Each time, it felt a little less meaningful. I stopped watching my balance so closely at the end of the month.

Still, I wanted to eat my burritos rather than watching them vanish. I pulled my act together and got my checking account balance back up to $500. For the next year, all was well, and I earned several pennies.

Then I moved across the country, demolishing my cushion in the process. I paid the burrito tax eight months straight before recovering financially.

This month, I sat down to do the math on the interest checking account. Over 52 months, I earned $0.47 in interest . . . and paid $168 dollars in burrito tax.

I’d hoped that my credit union’s incentives and penalty system would encourage me to be financially responsible. Instead, I was paying the credit union for the privilege of keeping my money. I barely even registered how much I was paying because it trickled out in relatively small, burrito-sized amounts.

I think I’m not alone in being too optimistic about my money-management skills. The credit union depends on checking account holders making the same mistake I did.

I’m resolving not to pay the burrito tax at all in 2017. I’m also resolving that if I pay the fee even one more time, my Do One Thing will be to call my credit union and convert my account to regular checking.

Megan Hartline is a librarian and the editor of @liblostfound.

This story is part of The Billfold’s “Resolve” series.


Support The Billfold

The Billfold continues to exist thanks to support from our readers. Help us continue to do our work by making a monthly pledge on Patreon or a one-time-only contribution through PayPal.

Comments