Bank Fees

“A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain.”-Robert Frost

Banks are in the business to make money. It used to be that they borrowed your money (via deposits) and made profits loaning that money out to others. But banks got greedy and wanted even higher rates of return through risky loans and risky investments. We saw how this imploded last year. Now banks are looking for alternative ways to make up their losses and one method is higher banking fees. In 2008 banking fees generated 53% of banking-industry income; up from 35% of income in 1995. Last year the average bounced check fee was $1, this year it is $29. Credit card fees have risen 80% from 2003 to 2008.

Here are 10 fees to watch out for:

1. Checking Accounts
   Banks are bringing back minimum balance fees and maximum number of transactions fees. Less obvious is the “fee” of lower interest rate in checking accounts vs saving accounts.
2. ATM
   If you use an ATM from a different bank, BOTH banks (yours and the ATM bank) can charge a fee of $2-4.
3. Overdraft
   If you overdraw your ATM or write more in checks than you have cash, banks will hit you hard for each overdraw and charge interest on the debt.
4. Bounced Deposit
   If you deposit a check from someone else and it bounces, you will be charged a fee. And it often happens that you assumed the money was good and wrote your own checks against the deposit that are now bouncing resulting in overdraft fees too.
5. Tellers
   Banks may charge to speak to a teller or charge if you make “excessive” use of teller (i.e. more than two visits a month).
6. Phone Inquiries
   If you speak to a bank rep by phone, you may be charged for the exchange.
7. Closing Accounts
   Some banks will charge you to close an account that is less than 90 days to 6 months old.
8. Currency Conversion
   You can use your credit card or ATM in foreign countries but your bank will charge you a fee of 1-3% for currency conversion.
9. Credit Cards
   Grace periods are getting shorter; late fees and rates are higher.
10. Annual Membership
    Some credit cards are bringing back a yearly fee for using the card.

Bottom Line

Examine your bank statement and credit card bills closely each month. Look for any new fees and call to complain. If the bank does not waive the fee, consider moving to a different bank or changing your banking habits.

Update

Here's a story about an attempt to trick customers into paying higher fees:

"Yesterday, my fiancee received an envelope from Chase (her bank). Inside was a brand new debit card with a stick on it that says it is replacing her old card and to activate it immediately. The two cards looked almost identical. The only difference between her old card and the new one is that the new one had the phrase "leisure rewards" in small letters on it. My fiancee immediately called Chase to find out why she was sent a new card when her old one hadn't expired yet. The Chase rep, who my fiancee says was kind of rude (and attempted to upsell her on a credit card while helping her out) told my fiancee that she did not have to activate the new card, it was optional. By activating the new card, my fiancee would be enrolled in a new debit points program where she would gain four points for ever dollar she spends (except that the program will not award points for any transaction that uses the PIN, effectively ruling out most uses of a debit card). On top of that, there is a 25 dollar a year fee for using the new card."

a la carte Fees

“I hate banks. They do nothing positive for anybody except take care of
themselves. They're first in with their fees and first out when there's
trouble.” - (abt 1960) Earl Warren, Supreme Court Justice

The AP reports that “Consumers spend billions each year on fees and add-on charges, many of which are unnecessary, and often because they're just not paying attention.” Avoidable costs include late fees on credit cards and bills, overdraft charges, cell phone fees, etc.

The article Aim that rage against the corporate fee machine lists 20 fees that you can eliminate with some advance planning. Here are a few examples:
1. Manual Billing Fees: some companies now charge for sending you a paper bill. Sign up for e-billing and save money. Just be sure to check your email frequently to avoid a late charge.
2. Spread Payments: my town allows me the option of paying my taxes in two payments instead of one – but at the cost of a $2 fee. If you have the money, pay bills in full and avoid the fee which greatly exceeds the interest that money would earn sitting in the bank.
3. If you have a cell phone and a landline phone, make the cell phone your main number and use the landline only for emergencies. Reduce the cost of the landline by canceling options for voice mail, caller ID, etc.

Bottom Line
Corporations love these add on fees; they are a big profit maker. For example my $60 cell phone plan has $10 in extra “fees” that I have no control over. The AP article notes that:

Consumer advocates see such charges, which they call "a la carte" fees, as misleading. "The trend is to deceive consumers into thinking the price is still the same, by adding fees and extracting services that used to be included," said Edmund Mierzwinski, a senior fellow at the advocacy group U.S. PIRG ...
"A la carte pricing is really not good for consumers, because it essentially prohibits them from doing legitimate comparison shopping," said Jack Gillis of the Consumer Federation of America.