Despite the growing consumer backlash against banking fees, charges are as rampant as ever. But experts say there are still some ways to outmaneuver the banks.
Last year, Congress passed legislation capping the fees they can collect from merchants on debit-card transactions, while the Federal Reserve put in rules aimed at protecting consumers from unexpected overdraft fees, which can cost upward of $35 a piece. In response, banks say they have to get creative with new ways to make up for the lost revenue. Some have raised fees for using a competitor's ATM or overdrawing on a checking account. New charges have popped up at some for services such as visiting a teller and closing a recently opened account. Some are even charging more for services consumers rarely use like sending money via wire transfer or cashier's check, says Greg McBride, a senior financial analyst for Bankrate.com.
That said, some banks are offering more fee-free options to attract new customers. During the second half of 2011, 39% of checking accounts did not charge a maintenance fee, up from 35% in the first half, according to rate-tracking site MoneyRates.com. For accounts with a charge, the average monthly fee dropped from $11.75 to $11.28. "Banks aren't stupid, they know people don't like fees," says Dennis Moroney, a research director at Tower Group. "This is a way to keep loyal customers and not make them angry."
Still, experts say that reprieve is likely to be temporary, and that banks will continue to find new ways to make up for lost revenue. Here are some ways to stay in front of them:
Many banks shift minimum balance requirements rather than raise or lower fees. Currently, they require an average balance of $3,590.83 to avoid paying monthly maintenance fees, down 13% from last year, according to MoneyRates.com. Most now factor in all of a customer's business -- including balances in savings accounts, available credit on credit cards and the existence of mortgages and student loans -- toward that minimum. So it's a smart idea to make sure your record is correct by linking every account at your bank online, says Richard Barrington, a spokesman for MoneyRates.com. "If you opened accounts at different times or some were first in a spouse's name, the bank may not be aware of that link," he says. Just keep in mind that the information may also be used determine credit risk, which could work against you for future applications if the bank wasn't aware of your connection to an account with a less-than-stellar record, Moroney says.
Free checking and low-fee accounts are still abundant. "In particular, smaller community banks, credit unions and online banks continue to be the lower-fee alternatives," says McBride. Plenty of financial institutions are still offering lavish bonuses for new account holders, although taxes and fees can eat away at those savings. It's also important to look beyond maintenance fees for convenient access to branches and ATMs, he says, because banks continue to test higher fees for using a competitor's terminals.
Customers may not need to undergo the hassle of switching banks to avoid a fee. Most of the increase in no-fee accounts has come from financial institutions adding new free checking products, says Barrington. Switching accounts within your bank requires little more than a branch visit, with no change to your account number, he says. But some still have balance requirements or other strings to watch out for such as minimum monthly debit purchases or no paper statements. More basic accounts may also have fewer perks such as reward points and in-statement coupons, Moroney says.