8 Ways to Fight Bank Fees

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Thanks to new rules regulating what banks can and cannot charge customers, financial institutions have to come up with new ways to separate consumers from their money.

Call it a financial form of "Whack a Mole," where after one fee is regulated out of commission, another one pops right up.

Sure, the new regulations do help consumers. The CARD Act (officially called the Credit Card Accountability, Responsibility and Disclosure Act went into effect in February and was aimed in part to protect consumers from unfair credit card fee practices. And Reg-E, which is a key component of the government overhaul of the banking industry, enables consumers to curb overdraft charges by “opting out” of bank ATM and debit card overdraft protection.

Rules like those are really hitting the industry where it hurts. According to a 2009 study by Moebs Services, banks earned $36 billion from overdraft last year (up from $11 billion in 1992). In a separate report, the Federal Deposit Insurance Corp. estimates that 41% of all bank overdraft fees stem from point-of-sale transactions, and another 8% from ATM transactions.

Big banks are particularly to blame for the overdraft culture that has permeated the industry. Another study from Filene Research says that the average annual cost of fees linked to bank checking accounts is twice as high at big banks than at credit unions and smaller banks.

But even with new rules in place, consumers are still vulnerable to onerous bank fees. To level the playing field, let’s take a look at 8 ways you can fight back against fee-frenzied banks in a post financial reform environment:

Battling checking account fees. Some banks have followed Bank of America’s (Stock Quote: BAC) lead and have started charging fees for opening and maintaining checking accounts. That might cost you up to $15 per month. Fight back by threatening to take your business elsewhere and your bank should come around. You can also limit fees by maintaining a minimum balance or by making a minimum number of debit card purchases and direct deposits. Check with your bank for details.

Read your mail. Banks are crafty. Many have elected to “inform” you of opt-in programs on overdraft fees in the form of innocuous mailers, often burying the details in the fine print. Make sure to read all of your mail from your bank and read it thoroughly. If you don’t, you’re leaving the door open for more overdraft headaches.

Get a “heads-up” from your bank. Many banks are now offering notices via cell phone or e-mail that your checking account balance is running low. Knowledge is power, after all, and knowing you’re account is near zero should be enough to replenish your account.

Watch out for “inactivity” credit card fees. More banks and credit card carriers are dinging customers who have an active credit card but don’t use it. Make sure to at least make a purchase or two each month so you don’t trigger the fee. A phone call to your card company complaining about the fee should result in the fee being lifted.

Get ahead of your credit card payments. The Wall Street Journal reports that credit card customers saw a 16% rate increase since the CARD Act was passed. It also estimates that the median fee for late card payments is at $39. Avoid higher rates on late payments by scheduling automatic payments ahead of your due date (contact your card carrier for your due date). Or, get your card carrier to e-mail or text you that your payment date is coming up.

Check out a community bank. The new financial reforms were aimed largely at big banks, with little collateral damage suffered by community banks and credit unions. Thus, smaller banks are less likely to have to hike fees and rates to compete. BankingMyWay can help you find great rates at local banks.

Ignore your “available balance.” If you’re checking your bank account online on a regular basis, good for you. But don’t rely heavily on your available balance to show you exactly how much money you have in your account. Banks routinely use the available balance gambit, but they don’t factor in transactions made at the end of the banking day, or account for any checks that have come in or gone out at the end of the day (it’s like banks want to confuse you). Make sure to wait until transactions and checks have been “posted,” i.e. moved into your account before making any rash withdrawals or transactions.

Keep a minimum cash buffer in your account. This one takes a bit of imagination — and self-discipline — but done right it works out great. Keep an artificial buffer of $100 or $200 in your checking account at all times, and never spend it. That safety net ensures you that you won’t trigger an overdraft since you’re likely to have cash in your account to cover any shortfalls.

One last tip. As a loyal customer, you have more bargaining power than you might think. Never be timid about picking up the phone and letting your bank know in a civil tone that you don’t appreciate certain fees. Threaten to take your business elsewhere and be prepared to follow up if you don’t get what you want. In a tight economy, banks need every customer they can get.

Just make sure banks know they can’t “get” you unless they back off on some of the fees laid about above.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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