Here's a few tips on how to protect yourself from a myriad of fees levied by banks
Did you get another charge from your bank that you weren't expecting? You're not alone. Banks are downright sneaky about some of the fees they impose, according to a new government report.
"Consumers may find it difficult to obtain information about checking and savings account fees," the Government Accountability Office said after its own staff investigators, shopping undercover at banks, couldn't get fee and other account details at more than a third of the bank branches they visited.
Moreover, the GAO also found that while fees have been going up, consumers have been complaining less. Perhaps people feel that the myriad fees they pay to their banks are worth the service and convenience. Or perhaps they have been beaten into submission by financial services companies that seem too big to fight.
But with consumers paying a reported $36 billion a year in checking and savings account fees, it does seem that attention should be paid.
Most importantly, decide how you want to bank and what services are important to you. Because banks now offer many different types of accounts, it makes sense to pick an account that does what you need it to do. Consider if you often operate without a cash cushion, if you are dependent on ATMs, if you like to pay your bills online, if you travel a lot internationally, if you bank online or still like getting lots of paper.
Make your banker suggest an account. If you want to bank locally, have a meeting with a representative. Find out which account best suits the way you bank. Once an account is recommended, ask if there's anything you can do to cut the fees or to use a less expensive account.
Beware of free checking. Free-checking accounts have exploded, and many pay fairly high interest on balances. That's great if you fit the requirements for this type of account and can manage its rules, which usually require your paycheck be direct-deposited, that you do all your banking online, and that you can't earn high interest on balances over a certain level. That's not so bad, but add in high costs for ATMs (if the free bank is an Internet one, you might not get free ATM withdrawals), checks, bounced checks, etc., and "free" might not be worth it.
Make a concerted effort to get control of overdrafts. The banks have wisely figured out how to charge more for the folks who most need overdraft protection. Here's how it works: If you have a nice cash cushion, are financially stable, and rarely overdraw your bank account, you can typically qualify for a very low cost overdraft line of credit. Money from that line will be swept into your checking account as needed, and the charge each time is nominal, or at a low interest rate. The rest of the world is stuck using a much more costly service, often called "bounce protection" which can run more than $30 for each overdraft. Furthermore, some banks will allow debit card users to keep overdrawing their account with several small transactions on the same day, each causing a fat fee. How to deal with this? Keep a cash cushion in your account and forget about it. Ask your bank for an inexpensive overdraft line of credit.
Consider all the nit-picky charges. Many banks charge for sending back canceled checks, for going above a certain number of transactions every month, for using ATMs that don't belong to your bank. They vary in the amount they will charge you to redeem cash in other countries, and in the exchange rate they use. They will sometimes cut you a deal if you keep other accounts at the same bank. They will "let" you schedule online bill payment for the day the bill is due, but then deduct the money from your account three days before they pay it. They will put a hold on one of your deposits for days, causing you to overdraw an account unknowingly. Add it all up and decide if it's the right bank for you.
Look at alternatives. If you're really getting slammed by your bank, look into community banks and credit unions as sometimes cheaper options. Consider getting two bank accounts: one that is local even though it may have higher fees, for ATM availability and easy access, another online bank for savings or easy bill pay.
Admit that sometimes convenience is worth the price. If you really like your bank's access, bill pay, checking policies, and more, don't sweat the small fees.
Linda Stern is a freelance writer. She can be reached at lindastern@aol.com.
rising
falling 