Bank fees are more outrageous than ever

[hlburi]

Nothing new here for most probably..but good for a refresher and a reminder to watch those fees!

 

http://articles.moneycentral.msn.com/Banki...r.aspx?GT1=8279

 

Bank fees are more outrageous than ever

Banks have found even trickier ways of raiding your wallet, and they're even targeting good customers who never bounce a check.

 

By Liz Pulliam Weston

Everybody knows that banks have jacked up fees on those who mismanage their checking accounts and credit cards.

 

Charges for late payments and exceeding your credit limit have almost tripled in the past decade. Bounced-check fees now average close to $30 -- with some banks charging as much as $45 for an NSF (nonsufficient funds) draft.

 

Rising credit card fees

Late fee Overlimit fee

1994 12.55 12.75

1995 13.25 13.20

1996 14.21 13.94

1997 19.24 18.44

1998 22.10 21.14

1999 25.61 24.96

2000 27.10 25.99

2001 28.29 26.88

2002 30.04 27.89

2003 31.44 29.23

2004 32.61 30.35

2005 34.42 31.22

 

Source: CardWeb.com

 

Getting less attention are the fees banks are imposing on their more responsible customers who are just trying to access and manage their accounts. For example:

 

ATM fees continue to rise. On average, your bank charges you 25% more than it did six years ago for using another bank's ATM. And the "foreign" bank adds a surcharge that's 40% higher than it was in 1999, Bankrate.com found.

 

Cash advances take a bigger bite. Getting cash from your credit card has long been expensive, but the tab has risen sharply in recent years. A decade ago, most credit card issuers imposed a 2% fee with a $2 minimum fee and a $10 maximum fee on cash advances, according to CardWeb.com. Today, the fee is 3% with minimums ranging from $5 (at most issuers) to $15 (at HSBC) and no maximums.

 

Stop-payment and returned-deposit fees have skyrocketed. A decade ago, stopping payment on a check usually cost $10 or less, and you generally didn't pay anything if a check you deposited turned out not to be good (other than bounced-check fees if you subsequently wrote checks based on the bad deposit). Today, the typical charge for a stop payment is $25, with one bank, Sun Trust, nicking its customers for $32, according to Bankrate.com. Meanwhile, many banks have instituted returned-deposit fees of $5 to $10 in addition to the cascade of bounced-check fees you might face.

 

"Courtesy" services are disappearing. Fees to talk to bank tellers, in person or on the phone, are now standard for many low-balance accounts. Cashier's checks and money orders, once free or $1, now cost $10 and up. Some lenders have imposed fees ranging from $5 to $15 for making payments by phone or online.

 

Miscellaneous fees are rising. Balance-transfer fees on credit cards of 3% to 4% are now commonplace, as are 3% foreign exchange fees when you use your credit card overseas. Account research can get pricey as well; banks and lenders may charge $5 for a copy of an old check or $10 for an archived statement.

 

A bonanza reaped in secret

Discovering all the ways you can get dinged is often a process of trial and error. Banks don't typically publish their complete fee schedules on the Internet, and the first time many people learn about a fee is when it shows up on their account.

 

One consumer advocate, the U.S. Public Interest Research Group (US PIRG), found the process of uncovering bank fees to be so difficult that it hasn't conducted its once-regular fee survey since 2001.

 

Related Resources

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"It got to be too labor intensive," said US PIRG program director Ed Mierzwinski. "We had to send people to the individual bank branches" to collect information.

 

All these fees, hidden or not, have helped many banks turn in record profits in recent years. Credit card fees alone jumped 18% last year, to $24 billion. Overall, bank fees are on track to top $55 billion this year, said Robert Hammer of investment banking firm R.K. Hammer.

 

Bankers say these fees aren't pure profit, though -- far from it. Penalty charges from late and overlimit fees, for example, are used to offset collection costs, as people who max out their cards or pay late are far more likely to default. Other bank fees are used to invest in technology and expand ATM networks.

 

"Banks have come up with ways to make it easier to check your accounts and your balances," said Tracey Mills, spokeswoman for the American Bankers Association. "And most of these fees are completely avoidable."

 

In fact, an ABA-commissioned study of 1,000 consumers found 65% paid $3 or less a month for routine banking services including account and ATM fees.

 

Avoiding fees can be tougher, though, if you don't have much money or a clear idea of what penalties you might face. Consumer advocates say fees are one of the factors scaring low-income folks out of the mainstream banking and credit systems.

 

It's understandable; cashing a paycheck can cost as little as $3 at a Wal-Mart, while money orders to pay bills cost less than 50 cents apiece at the mega-retailer. That works out to around $100 to $150 a year for banking services, which is what a run of four or five bad checks would cost the typical mainstream banking customer in fees.

 

You don't have to take it

Fortunately, there are banking alternatives for consumers looking for better deals:

 

Investigate credit unions and community banks. Member-owned credit unions and banks focused on community development seem to be in a time warp -- in a good way. Their fees and terms are often much more consumer-friendly than the typical bank.

 

Woodstock Institute's survey of credit cards issued by the nation's largest banks and credit unions found the latter were substantially less expensive. For example:

 

Seven of the 10 large national credit unions surveyed this year by Woodstock, which promotes economic opportunity for low-income and minority communities, didn't have cash-advance fees on their credit cards.

 

The three credit unions that did charge cash-advance fees levied an average 1.83%, compared with the 3% charged by all 10 of the nation's largest banks.

 

Only one of the 10 credit unions charged a higher interest rate for cash advances than for purchases, while all 10 of the major banks did.

 

Other rates, fees and terms on credit-union cards were substantially less expensive, as well, compared to bank cards:

 

Credit card pricing

Credit unions Banks

Interest rate on purchases 12.29% 12.11%

 

Penalty interest rate* 19.80% 25.40%

 

Grace period 25 days 21.5 days

 

Late fee $25 $39

 

Overlimit fee $17.90 $33.60

 

Balance transfer fee 2% 3%

 

 

*Imposed when customer misses one or two payments

 

Source: Woodstock Institute

 

Look for better deals. Any time you're about to do a transaction with your bank, think about who else might provide the service for less.

 

Chances are good, for example, that your neighborhood grocery or convenience store will sell you a money order for about $1 -- one-tenth of what you'd pay at your bank.

 

Then again, sometimes sticking with your bank is the best way to keep costs down. When it comes to ATMs, for example, you can typically avoid fees by using your bank's own machines.

 

You can also get cash back at many grocery stores and retailers by using your ATM card; while you may face a fee for the service, it's typically much smaller than you'd pay at an ATM.

 

And if all else fails, look for a Washington Mutual ATM. WaMu is among the few banks that don't surcharge other banks' customers. You'll still get dinged by your own bank.

 

Fee-proof your accounts. Obviously, the best way to avoid penalty fees is to track your balances and pay on time. Online account access and online bill payment systems or automatic debits can help you avoid mistakes. True overdraft protection, in which your checking account is tied to a line of credit or a savings account to avoid bounced checks, is also worthwhile if you can arrange it. (Sometimes banks balk if your credit is bad; others push "courtesy overdraft" or "bounced-check protection," which isn't the same. For more details, read "Don't be duped by bounced check 'protection'.")

 

Get the latest from Liz Pulliam Weston. Sign up to receive her free weekly newsletter.

Preferred format:

HTMLPlain TextYour e-mail address:Learn more about newslettersIf you find yourself paying lots of account and service fees, though, talk to your bank about whether another type of account might serve you better. Consolidating your accounts and maintaining higher balances may help you avoid fees. If you can't keep a high balance, by contrast, an ATM-only account might be a cheaper way to go.

 

Finally, if you're faced with an unwelcome fee, try asking the bank to waive it. Sometimes banks are willing to forgo a little income, especially if it's a courtesy to long-term or profitable customers.

 

Liz Pulliam Weston's column appears every Monday and Thursday, exclusively on MSN Money. She also answers reader questions in the Your Money message board.

[soldiergurl74]

join USAA... problem solved

[Marty716]

To summarize it in one sentence.

 

Banks are hazardous to your wealth.

[hegemony]

credit unions all the way...

[grneyedmustang]

USAA will soon be raising its stop pay and NSF fee to $29. I guess they're joining the other banks. Or maybe they've gotten bit one too many times and said "enough is enough?"

[Uncle Leo]

Don't go blindly to thy local credit union. In my experience, the larger a credit union gets, the more bank-like they become in their attiutude and policies.

[Ocean]

join USAA... problem solved

 

I did a week or two ago.......I HOPE they are better the BOA and USBANK.....both are two of a kinda....SUCK...and just waiting around the corner the getcha!!!!!

[Ocean]

To summarize it in one sentence.

 

Banks are hazardous to your wealth.

 

 

Aint that the truth!

[Ocean]

credit unions all the way...

 

 

Maybe....maybe not.....depends on the area....and which cu

[hegemony]

Don't go blindly to thy local credit union. In my experience, the larger a credit union gets, the more bank-like they become in their attiutude and policies.

who said blindly? CUs generally are better than giant bank.

[Uncle Leo]

Don't go blindly to thy local credit union. In my experience, the larger a credit union gets, the more bank-like they become in their attiutude and policies.

who said blindly? CUs generally are better than giant bank.

 

Some people might see a statement like...

 

credit unions all the way...

 

...and assume that means all they need to do is find a credit union, any credit union, and they'll be better off. Generally, you're right, Generally, they are better than larger banks, but a customer should still do the same due dilligfence and ask the same questions before they commit to a credit union, so they know for sure.

[tupacbiff]

Banks are also stupid. I was a CHASE customer for over 10 years. The changed my account type without notifying me in writing in violation of my original account agreement which I had saved. As a result I was charged a $7.00 fee which they refused to reverse.

 

I wrote all the way up the chain and they would not budge. I went to see the manager with the original account agreement and they would not budge. All for $7.00.

 

I explained I was in the market for a mortgage, did all my banking with Chase and was planning on going to them 1st and they would not budge.

 

As a result they lost a customer for life over $7.00

 

I then contacted their legal dept. with copies of the account agreement and threatened to contact my state AG as well as mentioned a fairly notorious class action law firm in my area and they folded.

 

End result: I get my money back and Chase loses a 10 yr customer over an attempt to weasel $7.00

[Uncle Leo]

Banks are also stupid. I was a CHASE customer for over 10 years. The changed my account type without notifying me in writing in violation of my original account agreement which I had saved. As a result I was charged a $7.00 fee which they refused to reverse.

 

I wrote all the way up the chain and they would not budge. I went to see the manager with the original account agreement and they would not budge. All for $7.00.

 

I explained I was in the market for a mortgage, did all my banking with Chase and was planning on going to them 1st and they would not budge.

 

As a result they lost a customer for life over $7.00

 

I then contacted their legal dept. with copies of the account agreement and threatened to contact my state AG as well as mentioned a fairly notorious class action law firm in my area and they folded.

 

End result: I get my money back and Chase loses a 10 yr customer over an attempt to weasel $7.00

 

I say good for you.