The Credit Card Accountability, Responsibility and Disclosure Act of 2009, or CARD Act, instituted rules and regulations that were more friendly to consumers of financial products and less in the favor of the banks that provide them. Regulations regarding interest rate hikes on existing balances and new rules on over-the-limit fees sent banks on a search for a way to make up revenue that was lost in their credit-card departments.
One of the most common ways banks sought to regain revenue was by adding a litany of fees on their other products. Unnecessary and previously unknown charges are now common, expensive and — if you plan correctly — avoidable.
Don’t Get Sold
Instead of calling it a fee, banks now market unnecessary “products.” The sales pitches that now accompany the opening of any account or credit line are usually for services that are redundant or wasteful. The most common are credit monitoring and lost-wallet protection.
Credit Monitoring
Under the Fair Credit Reporting Act, everyone in America is entitled to a free credit report from all three major reporting bureaus — Equifax, Experian and TransUnion. You can check your credit for free three times a year or once a year from all three agencies.
Credit monitoring is not worth a monthly fee. More importantly, your cards are most vulnerable, and lending institutions monitor them anyway. If you’re on vacation and spend money in a weird city, there’s a good chance your bank’s fraud department will call you. Likewise, if you rent a car or take out a cash advance. All of that is free; don’t let them oversell you by playing on your fears.
Lost-Wallet Protection
When your bank sells you on lost-wallet protection, their pitch is that in the event of you losing your wallet, you only have to tell them and they’ll take care of the rest. They’ll call all your other lenders and have them freeze your cards so you don’t have to worry about it.
In reality, how many cards do you carry in your wallet? Is a few phone calls worth up to $15 a month? More importantly, they can only call the lenders you register when you set it up. If you added a new card after registering with the service, they won’t know to cancel it. If you removed one without notifying them, they could cancel a good card unnecessarily.
Break Old Habits
You’ve been told since forever to keep only what you need in your checking account to cover immediate expenses and that the bulk of what you’re not using right now should be gaining interest in a savings account. That used to be right. Now, however, interest rates are low on savings accounts anyway and there are sizable incentives for checking account balances that are kept higher.
Don’t Buy Checks
Unless it’s a business account, virtually all bills can be paid online. Online pay is economical for both your time and money. Many banks are actually offering to give you a free book of checks when you purchase checks. What they don’t tell you unless you ask is that your checking account almost certainly comes with a free book of checks anyway.
How many checks are you really writing? Take the free book of checks. If you run low before you’re entitled to a new free book, you’re not hitched to your bank. They can be found online at steep discounts.
Checking Account Maintenance Fees
Many experts predicted that the new rules would end the era of free checking. They didn’t, but free checking did get a lot tighter and, well, less free. A slew of banks charge fees for dropping below a minimum balance during any one month, but not all. Find one that does not unless you’re sure you’ll never be tight.
There are online-only banks like Ally and Perkstreet that reduce costs by not having brick-and-mortar branches with paid employees and electric bills and leases. Not only do they often have no-fee checking, but some even offer interest-bearing accounts.
The problem there is ATM machines. Some don’t have a lot of kiosks, and some don’t reimburse for withdrawal fees. If you use cash, online banks may not be worth it due to those dreaded ATM fees.
Use Your Own ATM
Virtually all banks charge a fee for using another bank’s money machine. If you take out cash frequently, make sure you pick a bank that has a lot of terminals where you live and work. There is perhaps no other fee that adds up more quickly and unnoticed than ATM fees.
If you hit the off-brand ATM at the cash-only deli, not only will they charge you $1 or $3 or $3.75, but your own bank can charge you up to $5. If you take out a $20, that’s a 25 percent shakedown — not counting whatever the deli ATM charged you. It would literally be cheaper to have paid with a high-interest credit card and stretched it out on payments.
Ask for Clemency
If you’re a good customer, if you have a history with the institution, if you don’t bounce checks or accrue fees, ask them to waive a fee when you inevitably get one. Call and say something like, “Look, I’ve been with the bank since blank, I never messed up before this time, and it’s been a tough month — can you waive the fee?” Most customer service agents have the power to use their judgment on one-time waives on basic fees or get someone on the phone who can.
Don’t get sold on accepting fees just because your bank calls them “services” or “products.” Most of what they’re selling, you don’t need. Remember, by putting your money in their institution, they’re lucky enough to have your business. Your deposits are enough; don’t become their ATM machine.
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Andrew Lisa is a freelance writer living in Los Angeles. He writes about personal finance and writes Reputation.com reviews.
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