Banking fees are becoming more common. Mellody tells you what to watch for and how to stay informed of new fees.

I was recently charged a monthly service fee for what I thought was a free checking account because I used a teller at my bank to deposit a check. How do I find out about new fees and how do I avoid them? – Wanda, Atlanta, GA  
Unfortunately this situation is going to become more and more common as banking institutions try to find creative ways to cover their losses from swipe-fee regulations and opt-in overdrafts rules. These aren’t small numbers. The losses from swipe fees, the seemingly insignificant charges that card-issuers charge merchants for processing credit card and debit transactions, is in the neighborhood of $6B according to industry estimates. And the losses from opt-in overdraft rules are even higher at $7.6B from their peak in 2009. With these kinds of numbers jumping off the balance sheet you can be sure that some existing fees will be raised and new fees will be created. A recent article in The Wall Street Journal even called this “the beginning of the onslaught”.

So what are the fees that we should be keeping our eyes open for?
The absolute biggest fee change right now is the overdraft fee rate. While regulations state that customers need to opt-in for overdraft “protection” those same regulations don’t mandate the actual charge once an overdraft has been incurred. The average charge, according to a recent study, is now $30 per occurrence. That’s up $2.50 from last year and this increase translates into $2B a year more for consumers who overdraw on their accounts. And while this may be the fee that could take the biggest bite out of our accounts it is by no means the only one. Here are a few more:

• Wire Transfer fees for both incoming and outgoing transfers
  
  
• Check cashing fees for non-customers
  
  
• Account closing fees – Chase and PNC Bank already charge $25 to close some of their accounts and they probably won’t be alone on this for very long
  
  
• Monthly service fees – new account requirements can easily catch you off guard and could result in an $8-10 charge
  
  
• New minimum balance requirements
  
  
• Stop payment fee increases
  
  
• Card replacement fees – BoA charges $5 to replace your card and $20 if you need the rushed overnight service
  
  
• Out-of-network ATM fee hikes
  
  
• Paper check fee increases

How do we become informed of these fees before becoming victims to them? 
The simple answer is that you’ll need to be vigilant. FDIC Consumer Protection Laws require financial institutions to provide prior notice in the event of a change in terms. Specifically the relevant law says that “a financial institution shall mail or deliver a written notice to the consumer, at least 21 days before the effective date, of any change in a term or condition required to be disclosed … if the change would result in increased fees for the consumer, or increased liability for the consumer.”

• Open and read every piece of mail your financial institution sends you to find out about changes beforehand.
  
  
• Go to your bank’s website to learn about rates, fees, terms, and conditions that are currently applicable. You may have to dig a little but the information will be available on their website.
  

If we decide that our bank has begun charging to many fees, and it is in our best interest to switch banks, what steps should we take? 
A really, really great resource for just this situation was published by Consumer Reports non-profit arm – Consumer Union:

http://www.consumerreports.org/cro/resources/streaming/PDFs/Move-Your-Money.pdf

And here’s the gist of what they had to say:

• Once you’ve chosen a bank or credit union go ahead and open the new account before you close out your old one and deposit just enough to cover minimum balances and to avoid any fees. You’ll be able to quickly transfer funds electronically this way.
  
  
• List out your current automatic payments and deposits for each month and make sure that you have enough in the old account to cover any bills that are still associated with that account during the process of moving your money
  
  
• Have your employer change your direct deposit to your new account
  
  
• Reschedule automatic payments once you know the date that the direct deposit switch will take place. Direct deposits can take a pay cycle or two to go into effect.
  
  
• Leave a small balance in your old account for another month to cover any bills that you might have overlooked.
  
  
• Close out your old account and get written confirmation. Don’t for a moment think that just because you don’t have any money in the account that it will automatically be closed.
  

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