Thanks to new rules regulating what banks can and cannot charge customers, financial institutions have to come up with new ways to separate consumers from their money.
Call it a financial form of "Whack a Mole," where after one fee is regulated out of commission, another one pops right up.
Sure, the new regulations do help consumers. The CARD Act (officially called the Credit Card Accountability, Responsibility and Disclosure Act went into effect in February and was aimed in part to protect consumers from unfair credit card fee practices. And Reg-E, which is a key component of the government overhaul of the banking industry, enables consumers to curb overdraft charges by “opting out” of bank ATM and debit card overdraft protection.
Rules like those are really hitting the industry where it hurts. According to a 2009 study by Moebs Services, banks earned $36 billion from overdraft last year (up from $11 billion in 1992). In a separate report, the Federal Deposit Insurance Corp. estimates that 41% of all bank overdraft fees stem from point-of-sale transactions, and another 8% from ATM transactions.
Big banks are particularly to blame for the overdraft culture that has permeated the industry. Another study from Filene Research says that the average annual cost of fees linked to bank checking accounts is twice as high at big banks than at credit unions and smaller banks.
But even with new rules in place, consumers are still vulnerable to onerous bank fees. To level the playing field, let’s take a look at 8 ways you can fight back against fee-frenzied banks in a post financial reform environment:
Battling checking account fees. Some banks have followed Bank of America’s (Stock Quote: BAC) lead and have started charging fees for opening and maintaining checking accounts. That might cost you up to $15 per month. Fight back by threatening to take your business elsewhere and your bank should come around. You can also limit fees by maintaining a minimum balance or by making a minimum number of debit card purchases and direct deposits. Check with your bank for details.