Published Monday, August 2, 2010 @ 12:57 am

In the current economic environment, where lawmakers are setting their sights on tighter restrictions on the financial industry’s abusive practices—from excessive overdraft charges to out-of-control interest rates— banks appear to be fighting back with higher fees.

According to The Wall Street Journal, “industry leaders like Bank of America Corp., Wells Fargo & Co., HSBC Holdings PLC’s HSBC North America, Fifth Third Bancorp and others are experimenting with new ways to nick their customers, from imposing maintenance fees on checking accounts to rolling out new charges for services like fraud alerts, debit cards and credit reports.”

This news should matter to anyone with a bank account. Even though new rules mean banks must fully share any new fees with their customers, these institutions can do so in what WSJ calls “the ordinary-looking correspondence that most consumers toss in the trash without reading. The result: Many people will learn of the new charges only after opening their monthly statements.”

Customers should remain vigilant. Even customers who keep low balances and manage their accounts responsibly can be hit with so-called “penalty fees.” Here are some things to look out for and things you can do to fight back against excessive banking fees

Checking Fees
In this new wave of banking fees and costs, free checking may be the first to go. Instead, some banks are implementing monthly fees for keeping an account open, ending what has been years of free checking options for millions of customers and a major bank enticement meant to persuade people to do more types of business with their bank. If your free checking goes the way of the dinosaur, one way to get a better deal on checking fees is to do a lot of business with your bank—from mortgages to car loans. For some banks, this added activity will be an incentive for your bank to waive your checking fee. If worse comes to worst, there’s always the option to move your money. Shopping around for a better banking experience can not only mean free checking but also a better ongoing relationship with a community bank.

In addition to checking fees watch out for those fees related to checking account woes, including:

Maintenance Fees
As mentioned, checking account maintenance fees are becoming the new banking standard. In addition to doing more types of business with your banks, sometimes banks will waive these maintenance fees when you keep a minimum balance, combined balances in several accounts, or even when you use direct deposit.

Debit Fees

Often banks will require you to use your debit card a certain amount of times in order to avoid debit card fees. To offset this, often banks will match these transactions with cash back, often deposited directly into a separate savings account. Check into your bank’s  options.

Interest
Historically, bank accounts with low fees don’t pay any interest. This give and take is typical. Keep this in mind when setting you accounts for the long haul. Often, your money is better housed in a different account.

Rewards
Similarly, accounts with the lowest fees typically don’t offer rewards. Check with your own bank about different rewards; but always read the fine print as often in the financial world, “reward” is bank code for “to the customer’s ultimate detriment.”

Minimum Deposits
The Wall Street Journal also warns that banks may raise minimum initial deposit requirements to encourage people to keep more of their money in their coffers. Again, when opening a bank account in this tough economic climate, it’s best to do your research and shop around.

And, as always, a little due diligence now can go a long way later. Happy banking.

+ Continue reading this article

Published Thursday, July 9, 2009 @ 9:22 am

Bankruptcy and personal money management are tightly intertwined. As you read through the blog you will probably notice that a lot of our posts will offer advice and tips on saving, how to avoid scams and general philosophies about preserving financial stability.

Here is another post about how to hang on to more of your money, which is especially useful for anyone coming out of bankruptcy or performing some initial research. These tips involve banks, which many people believe want to help you with saving money. However, that is not always the case. In fact, it’s becoming quite the opposite.

Banks (and credit card companies) are in attack mode. Surprise fees and quick interest jumps are now an everyday occurrence and customer service operators are busy as ever routing the complaints. Here are a number of examples:

• Checking accounts: This is basically a fee to use your own money. Many banks will give it to you for free if you have other accounts or a loan. Once that loan is paid off (isn’t that the idea?) they will add a fee for your checking. Most likely without notice. Some will charge you now if you don’t carry a specific balance or use enough checks each month. Don’t assume your checking account is free.
• ATM fees are very unreasonable, across the board, if you don’t use your own bank’s ATM. Some surcharges are reaching toward $4.00/transaction. The only way to make this affordable is to take out more money, thus lowering your cost of getting the money. Still, you probably only need $20, not $400. Use your own bank but if there is still a fee, go inside to a teller.
• But wait … many banks now charge to use tellers! Complaints are piling up about the reinstatement of teller fees. As hard as it is to believe, it was once quite common but drew significant flack from national consumer advocates. Looks like we’ll need their help again.
• Overdraft charges are also becoming steep. While many banks began to offer accounts with no overdraft fee as an incentive, watch for it to kick-in unexpectedly. Also, it does not help that a bank allows you to take more than you have from an ATM and then has the nerve to hit you with an overdraft penalty.
• If you deposit a check that bounces, you get slapped with the penalty. Ouch. How were you supposed to know?
• You get charged for the ATM, charged for speaking with someone, so how about the phone? Nope. Fees are popping up for calling the bank, too.
• Visiting a brother in Canada? Well, you should now expect to pay to get currency converted. Expect to get lopped off at the knees on the front end, when exchanging the money and at the end when converting back to dollars whatever foreign currency you have left over.

As most of us try to avoid using credit cards and the fees they are implementing before new laws kick-in to prevent that very thing, it seems that even working in cash will cost us. Basically, it’s become a tough world in which to try to stay debt-free. For those teetering on the brink of a major financial setback, don’t let a surprise fee push you into the abyss.

+ Continue reading this article