Avoiding bank-fee surprises: Switch to the offensive to stop them before the hit you again

NEW YORK -- I was filing some old bank statements during a routine desk cleanup. One I hadn't opened from last April had a surprise in it. A small slip of paper -- a new fee schedule -- fell onto the floor.

An unopened bank statement? OK, you got me. No, these days I don't balance my checkbook every month. Simply don't have the time.

But that's not the issue -- it's bigger. New fees for services, new "punitive" fees. Some lower, most higher. And only for certain types of accounts. Now, with all the accounts they offer, do I remember what kind of account I have? Nope.

And there's a bigger issue: my bank -- and probably yours too -- chooses to notify me once using a nondescript mailing insert. Even if I had opened the statement I probably wouldn't have noticed it. And I still don't know if it applies to my account.

Couldn't they have sent me a computer-generated letter telling me how my fees would change? That would have caught my attention. But did they really want to catch my attention? Probably not.

This sort of disguised disclosure happens with credit cards too. Something buried in the fine print of a new "terms and conditions" piece thrown into your statement. Informative? Proactive? Hardly.

Bottom line: it's worth 15 minutes to double check your fee exposure.

The reason why

Fee increases are common now. Why? In part, because of the mortgage crisis. That's right, with the mortgage business in the doldrums -- or worse, consuming precious bank capital -- banks are out to capture cash where they can. Bank ATM fees generated some $10 billion for U.S. banks last year. It's a big deal.

And in today's environment of "gotcha capitalism," where a quoted rental car rate may be less than half of what you'll actually pay, almost anything goes.
Indeed, Bank of America raised its noncustomer ATM fees to $3 last September, and J.P. Morgan Chase and Wachovia followed suit in some markets. Now that's $3 for them, plus anywhere from a dollar to $2 for your bank, to get that $20 you need to pay for parking or whatever. Ouch.

Undoubtedly, there's more to come. Higher fees for insufficient funds, multiple savings withdrawals, point-of-sale use and others. The good news: a few, like online banking fees, are falling (Competition does work, and banks realize they save money too.)

And you should expect increases in required minimum balances for fee-free or reduced-fee accounts. According to a 2007 Bankrate.com survey, minimum balances to avoid fees were up some 25% last year to over $3,300.

Start with a phone call

Here's what I'd do:

• Review fees with a bank agent. Call customer service and have them lay out all the fees for your type of account -- and for similar accounts that might be a better deal. Getting this info from a bank's Web site can be surprisingly difficult -- you're probably better off to do this by phone. The agent at my bank was informed and helpful.
• Check comparison tools. Bankrate.com offers a survey of checking accounts by geography. It doesn't cover all fees but does hit biggies like insufficient funds, and it will show differences between large national banks, regional banks, Internet banks, etc. You can get a ballpark idea of what you should pay. Check out the site.
• Consider credit unions. If you're eligible, credit unions still provide the best deal. Checking accounts are often free with ATM fees and free overdraft protection on many types of accounts. Credit unions are not-for-profit and have largely steered clear of the mortgage mess, so they don't share big-bank motives. My recent experience: ATM alliances and online banking have made credit union products very competitive -- even if you travel or have some other situation once considered an inherent disadvantage.
• Consider a large deposit to avoid fees. The numbers may work out -- you'll have to check. If you park $10,000 or so in a CD, you'll get a decent (although currently dropping) interest rate, plus the benefits of reduced fees. Together it can pay off. Plus, you won't feel "nickeled and dimed" by your bank.

My advice: spend 15 minutes with an agent reviewing your current fee "menu." Then spend another 15 to check the alternatives. The half hour will be worth your while.