Don't Bank on Lower Fees

You¹d think a bailout worth billions would be enough to shore up most banks.

But it seems the ailing industry requires another infusion of cash from a different source -- you. Amid the flurry of mergers and other changes, banks have been quietly raising all manner of fees, according to a recent survey by independent research firm Bankrate.com. Here's how to avoid them.

Many people claim to have never bounced a check -- but banks charged customers an estimated $17.5 billion in overdraft fees in 2007, and that number is likely to rise, says Elizabeth Rowe, director of banking advisory services at Mercator Advisory Group. Banks process checks and debit card purchases in order of biggest to smallest, rather than sequentially. That means you're more likely to have multiple overdrafts -- and multiple overdraft fees, at an average of $29 a pop. "They've set up a quicksand model and then fine the consumer for falling into it," Rowe says.

One solution: Link your checking and savings accounts, says Greg McBride, senior financial analyst at Bankrate.com. Alternatively, some banks will let you link your checking account to a credit card, which will be charged with the overdraft amount.

You probably wouldn't agree to a 17 percent interest rate on a $20 loan -- but that's exactly what you can expect to pay when you use another bank's ATM this year. Up 50 cents from last year, the average total customer charge when using another bank¹s ATM was $3.50. If you can¹t find your bank¹s ATM nearby, use your debit card to get cash back from a retailer -- that won't cost anything.

Banks aren't just raising fees; they're lowering interest payments as well. The average interest paid on a checking account fell to 0.24 percent in 2008, according to Bankrate .com, a 25 percent decrease from the prior year. What's more, the average minimum required to avoid a monthly fee has increased to $3,500. Find a free checking account (which will likely pay even less interest) to keep your bill-paying money handy; the minimums on these accounts are usually $110. Keep the rest of your cash in a high-yield savings account, and transfer money to your checking when needed.