By Jean Chatzky with Arielle McGowen
August 27, 2009
Banks have already figured out that they stand to lose big bucks in interest and fees because of the federal Credit Card Accountability, Responsibility and Disclosure Act.
Not surprisingly, they're looking for ways to make up that ground even though much of the law doesn't take effect until February. Nonetheless, new fees and charges are on the way. Add that to frequent fee increases, and it reinforces that you need to be a careful consumer.
In June, Bank of America increased its monthly fee on its MyAccess checking to $8.95 from $5.95. Rival banks are bound to follow suit.
Customers who don't maintain significant balances should be on the lookout for additional or higher fees. Banks may start requiring you to keep even more money in your account to avoid charges. This is a fee you can avoid, says Greg McBride, senior financial analyst at BankRate.com. "Free checking accounts are still widely available, so you're not held hostage to accounts that have high balance requirements and high monthly service charges." Overdrafts
It's already common to see overdraft fees of $35 or more if you overspend your account. Additionally, you're charged interest on the money you've borrowed to cover your purchase. Beware of tiered overdraft fees, in which fees rise with each successive overdraft. Nine out of the 16 largest banks also have sustained overdraft fees, which means if you don't pay off the overdraft amount and the fee in full, an additional fee gets tacked on.
These fees are particularly annoying because banks use a bookkeeping method called stacking the debt. They process transactions on a given day not in the order you make them but by the largest first. If the largest causes an overdraft, you'll incur fees on all of the smaller ones. Ouch.
For extra protection, Greg advises linking your savings and checking accounts so you can borrow from yourself, not from the bank. At most banks, you can opt out of overdraft protection (many banks enroll you automatically). Your account may be denied if you have insufficient funds—potentially embarrassing, but not costly. ATM Fees The cost to use an out-of-network ATM is rising. BankRate.com found the average bank charges $1.97 if you use its ATM but aren't a customer. Your own bank will charge another $1.46, on average, if you go out of network, so you get zinged in both directions.
Also, bigger isn't always better. "The big banks don't necessarily have an exclusive advantage here because of large networks. A lot of smaller banks belong to ATM alliances that give customers access to hundreds or thousands of ATMs free of charge," Greg says. Smaller banks also tend to be slower raising fees.
Balance Transfers It used to be that, if you wanted to take advantage of a 0 percent credit card balance transfer offer, you paid 3 percent of the amount transferred with a cap of $75 to $100. Now you'll pay at least 3 percent—sometimes as much as 5 percent—without a cap.
"We may see the elimination of [cheap balance transfers] because I don't see that there's a business for doing that anymore," says Nessa Feddis of the American Bankers Association.
Before you open any account, ask the bank for its fee account schedule. They're required by law to give it to you.