Five Sneaky Bank Fees

Overdraft Shell Game Fees    Paper Fees    Courtesy Overdraft Fees    Point-of-Sale Fees    Last-Minute Bill Pay Fees

YOU MAY HAVE FREE checking with your bank, but that doesn't mean you aren't paying fees elsewhere.

Where fees were once used as a deterrent from, say, repeatedly bouncing checks or other poor behaviors, they're now big money makers for banks, accounting for 56% of bank income, according to the Federal Deposit Insurance Corp. Banks earned an estimated $80 billion on fees in 2006. Ten years ago, fees accounted for just 3% of bank income.

Overdraft Shell Game Fees
If you think one $20 overdraft fee is bad enough, imagine a whole cascade. "Banks are allowed to change the order in which their checks clear," says Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group. Bank of America, Chase, Citibank, HSBC, SunTrust, U.S. Bancorp, Wachovia, Wells Fargo and others all have policies to pay daily transactions in order from the largest to smallest dollar amount. Their take: Consumers' largest checks are their most important. (Who wants to bounce their mortgage payment?) But Mierzwinski says he and other consumer advocates see it as a way to draw in more fees. "They manage the bounces to get more bounces," he says.

Paper Fees
With banking going digital, the days of getting your cancelled checks back in the mail are pretty much over. Most consumers are OK with the change -- until they need an old check, say, to prove a charitable contribution during a tax audit. With processed checks saved as digital images (and those only accessible for a year), expect to pay if you insist on paper copies. SunTrust, for example, charges $5 for each check, statement or other item photocopied.

The solution is pretty simple. If you're the type who likes to have paperwork on hand, simply sign up to have copies of your checks sent each month with your statement, suggests Jeffrey Blyskal, senior editor for Consumer Reports' Money Advisor. (Banks are willing to do this for free each month automatically; the fees come in when you're requesting a copy of an older check.) Alternatively, if you still have access to the digital check images stored at your online account, print them yourself. For tax and legal purposes, that's just as good as a paper copy from the bank.

 Courtesy Overdraft Fees
"No question, the sneakiest fee is the fee for bounce protection," says Mierzwinski. These so-called courtesy overdraft fees kick in when the bank pays out your check -- even if it would have bounced. It's similar, but far nastier, than a typical overdraft fee, he says. (Overdraft fees traditionally pay out to both the merchant and the bank for a bounced check; courtesy fees are paid solely to the bank for covering a check instead of bouncing it.) You'll pay anywhere from $20 to $40 per check, depending on your bank, your account type, how much you're overdrawn and your standing as a customer. After that initial fee, you'll pay $2 to $5 per day until you've paid back the bank.

This is another fee that's easily avoided by setting up automatic transfers from your savings account when your checking account would otherwise bounce. You'll still pay a fee, just not as much. Chase, for example, charges your checking account just $10 for an overdraft-triggered transfer from another account. (You also could open a line of credit or sign up for overdraft protection, as mentioned in point one.)

Point-of-Sale Fees
Need another reason to sign for purchases instead of using your PIN? Some banks charge a point-of-sale fee to process PIN transactions, which go through a different network than those processed as credit. U.S. Bancorp charges its consumers in Colorado, Indiana, Kentucky and Ohio 25 cents for every PIN purchase. Wells Fargo charges a flat rate of $1 each month you make PIN transactions. To avoid these fees, pick up your pen and sign for purchases instead. (That gets you better protection, too.)

Last-Minute Bill Pay Fees
It's 10 p.m., and you know just where your phone bill is. In a drawer, unpaid -- and the due date is tomorrow. For an extra $5 to $15, called an expedited bill pay fee, your bank is happy to get the cash there on time. It's a lucrative part of business, says Blyskal. In 2006, banks raked in $1.26 billion from expedited bill pay alone, according to Javelin Strategy & Research, a market research company. The sad part: With these fees, it's nearly as expensive to pay on time as it is to pay late.

To avoid the fee, check out your bank's bill pay policies. Payments set up online are processed electronically, but can take a day or two to process. Citibank, for example, advises consumers to schedule payments at least two business days before their due date. Then set up free payment reminders to help you keep on track.

Banks That Want Your Business !!!
AltaVista

THESE DAYS, credit-card rewards programs are old news. The latest and greatest perks are now attached to your checking and savings accounts.

With the rise of Internet-only banks and bricks-and-mortar mergers, it's become increasingly easy for customers to swap their accounts for a better deal, says Lisa E. Phillips, a senior analyst with eMarketer, a market research firm. "People are looking around and saying, 'What can you give me for free?'" she says. And that makes banks nervous. They're enticing customers to open an account -- and stay for the long haul -- with financial incentives such as generous savings rates and fee-free ATM usage.

We've tracked down four financial incentives you want to snap up. After all, you only need one toaster.

No. 1 -- ATM Fee Waivers
Using another bank's ATMs can really add up. You'll pay an average $2.89 for the transaction, which includes a fee from your bank and one from the bank that runs the ATM, according to Bankrate.com.

That said, more banks are waiving or reimbursing those pricey charges. Washington Mutual never charges you for using a foreign ATM; while Wachovia and SunTrust both waive two fees per cycle. There's a catch, however — though you won't incur fees from your own bank, you'll still be charged by the other bank.

Bank of Internet, however, reimburses account-holders for a set amount of the ATM fees other banks charge. With a Freedom Checking Account, for example, you'll be reimbursed up to $7 per month. Since most banks charge nonaccount-holders $1.50, you'll get four free trips to the ATM.

Without the extensive ATM networks of bank chains, individual banks are at a disadvantage -- their customers are constantly racking up foreign ATM fees. But some of these banks are getting around fees by sticking together. Electronic payments network NYCE has created SUM, an ATM network that individual banks and credit unions can join. So if you're a member of the Howmet Credit Union in Whitehall, Mich., for example, you get free use of any of the more than 2,800 ATMs at member institutions nationwide.

No. 2 -- Activity Rewards
Programs details differ, but the idea is the same: Make use of your account, and be rewarded. Here's a selection:
 

· Bank of America Keep the Change. Every debit card purchase you make will be rounded up to the nearest dollar. The change is deposited into a linked savings account. For the first three months, Bank of America will match your contributions. Though it's really a forced savings strategy, it's been a popular program with consumers, says Genie Driskill, COO of Synergistics, a financial-services research firm.

· Citibank Thank You Network. You'll rack up points for all your purchases, plus additional points for the accounts and services you use. Just having a checking and savings account earns you 50 points each month. Add in direct deposit and online bill pay (both free), and that total jumps to 150 points each month. You'll also earn one point for every $2 spent on signed debit card purchases, and one point for every $3 spent when you use your PIN.

· Visa Extras. Numerous banks -- including Wachovia, Commerce and U.S. Bank -- offer this program via your debit card. Typically, you'll earn one or more points per $1 spent. (Earn bonus points by shopping with select retailers through the program web site. Target, for example, yields 20 points per $1 spent.) You must sign for purchases, rather than type in your PIN, to earn rewards.

· Washington Mutual Free Checking. You'll get three cents back on each debit card purchase. The money will be deposited into your account annually.

No. 3 -- Free Checks
Washington Mutual drew attention to this perk with its new WaMu Free Checking, which promises "Free Checks For Life." It is currently the only major U.S. bank to offer this perk in a free checking account, though others — including SunTrust, HSBC, and Wachovia — provide free checks for other accounts. That's a savings of about $10 a year.

No. 4 -- Better Interest Rates
With interest rates on the rise, banks are now offering decent rates on their money-market accounts. The most competitive rates are being offered by Internet banks or branches.

Here are five of the heavy-hitters, ordered by highest yield:

Citibank Direct
APY: 4.75%
Min. Deposit: $1
Note: No fees or service charges. You must have a Citibank checking account. (Fees may apply.)

HSBC Direct
APY: 4.65%
Min: Deposit: $1
Note: No fees or service charges. You can opt to get an HSBC ATM card linked to your account.

First Fed Direct
APY: 4.57%
Min. Deposit: $1
Note: No fees or service charges.

Emigrant Direct
APY: 4.50%
Min. Deposit: $1
Note: No fees or service charges.

ING Direct
APY: 4.15%
Min. Deposit: $1
Note: No fees or service charges. You'll get $10 for each friend you refer who opens an account with an initial deposit of $250 or more.

Favorite Sites
JAB Tracy Management Group

We Are The Managing Minds Behind Various Companies & individuals, Offering Quality Products & Services At Affordable Rates!!!

CLIENT INDEX