Getting a handle on bank fees

By Linda Stern

WASHINGTON (Reuters) - Snap! There's another charge from your bank that you weren't expecting. You're not alone. Banks are downright sneaky about some of the fees they impose, according to a new government report.

"Consumers may find it difficult to obtain information about checking and savings account fees," the Government Accountability Office said after its own staff investigators, shopping undercover at banks, couldn't get fee and other account details at more than a third of the bank branches they visited.

Moreover, the GAO also found that while fees have been going up, consumers have been complaining less. Perhaps people feel that the myriad fees they pay to their banks are worth the service and convenience. Or perhaps they have been beaten into submission by financial services companies that seem too overwhelming to fight.

But with consumers paying a reported $36-billion a year in checking and savings account fees, it does seem that attention should be paid.

Here are some ways to minimize the fees you pay to your bank.

-- Most importantly, decide how you want to bank and what services are important to you. Because banks now offer many different types of accounts, each with its own menu of charges, it makes sense to pick an account that does what you need it to do. Consider if you often operate without a cash cushion, if you are dependent on ATMs, if you like to pay your bills online, if you travel a lot internationally, if you bank online or still like getting lots of paper. Then you'll be able to find a bank that offers what you need.

-- Make your banker suggest an account. If you want to bank locally, walk into your branch and have a meeting with one of the bank's representatives. Find out which of their accounts would best suit the way you need to bank. Once they recommend an account, ask if there's anything you can do to cut the fees on that account or to use a less expensive account.

-- Beware of free checking. New free checking accounts have exploded, and many pay fairly high interest on bank balances. That's great, if you fit the requirements for this type of account and can manage its rules and regs. Usually, they require that you get your paycheck automatically deposited to the account, that you do all of your banking online, and that you can't earn high interest on balances over a certain level. All that's not so bad, but add in high costs for ATMs (if the free bank is an Internet one, you might not get any free ATM withdrawals), checks, bounced checks and more, and "free" might not be worth it anymore.

-- Make a concerted effort to get control of overdrafts. The banks have wisely figured out how to charge more for the folks who most need overdraft protection. Here's how it works: If you have a nice cash cushion, are financially stable, and rarely overdraw your bank account, you can typically qualify for a very low cost overdraft line of credit. Money from that line will be swept into your checking account as needed, and the charge each time is nominal, or at a low interest rate. The rest of the world is stuck using a much more costly service, often called "bounce protection' which can run more than $30 for each overdraft. Furthermore, some banks will allow debit card users to keep overdrawing their account with several small transactions on the same day, each causing a fat fee. How to deal with this? Keep a cash cushion in your account and forget about it. Ask your bank for an inexpensive overdraft line of credit. Learn to never go below $0.

-- Consider all the nit-picky charges. Many banks charge for sending back canceled checks, for going over a certain number of transactions every month, for using ATMs that don't belong to your bank. They vary in the amount they will charge you to redeem cash in other countries, and in the exchange rate they use. They will sometimes cut you a deal if you keep other accounts at the same bank. They will "let" you schedule online bill payment for the day the bill is due, but then deduct the money from your account three days before they pay it. They will put a hold on one of your deposits for days, causing you to overdraw an account unknowingly. Add it all up and decide if it's the right bank for you.

-- Look at alternatives. If you're really getting slammed by your bank, look into community banks and credit unions as sometimes-cheaper options. Consider getting two bank accounts: one that is local even though it may have higher fees, for ATM availability and easy access, another online bank for savings or easy bill pay.

-- Admit that sometimes convenience is worth the price. If you really like your bank's access, bill pay, checking policies and more, don't sweat the small fees. A good, convenient bank that saves you time and works for you is worth paying something for.

(Linda Stern is a freelance writer. Any opinions in the column are solely those of Ms. Stern. You can e-mail her at lindastern@aol.com.)