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Your Bank's Latest Fee Shakedown

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You know how banks now have to give you more notice before hiking your credit card interest rates? And how they're no longer allowed to charge those crazy penalty fees on top of other penalty fees? Great stuff, right?

That'll be $144, please.

That's the minimum cost -- $12 a month -- of having a Chase Total Checking account if you don't maintain a $1,500 minimum balance (or $5,000 across all your deposit accounts) or make $500 in monthly direct deposits.

These new fees from JPMorgan Chase (NYSE: JPM  ) take effect Feb. 8. And though I'm sure you're tempted, don't hastily blow off the bank for greener pastures just yet. The grass on bank lawns everywhere is getting browner by the day.

What do you mean, I owe you money?
Costs like these on formerly "free" accounts have been creeping onto bank statements lately, ever since new consumer protection laws capped some of banks' more usurious fees.

With new limits on how much they can shake down customers for every infraction, banks have begun to hit up the rich relatives for rent money. Here's the part where we're supposed to cue a sad-faced clown showing his empty pockets, apologizing for not being able to "afford" to offer you, dear customer, free checking anymore.

Pay no attention to those record profits behind the curtain, bank patrons. Instead, have your checkbooks handy. As Lowcards.com reports, banks have dropped the "r" in the word "free":

  • Over at Bank of America (NYSE: BAC  ) , you'll pay $6 to $25 a month, depending on your account balances and the kinds of accounts you have with the company.
  • A basic account at Citigroup (NYSE: C  ) runs $8 a month if you fail to transact with the bank at least five times a month. And for a less basic account, it's $20 a month if your balance (in a single or multiple accounts) falls below $6,000.
  • And at Wells Fargo (NYSE: WFC  ) , formerly free checking now costs new customers $5 a month, plus $6.95 for online bill payment privileges.

Qualify for free checking? You're still not off the hook
Even if you have sufficient funds to earn the privilege of free checking, you still may not be able to shake off that bull's-eye on your back.

That's because the fee infestation is spreading. For example, starting Feb. 8, in addition to increased checking account fees, ATM and debit card withdrawals at non-Chase money machines will rise to $5 (formerly $2). Daily overdraft protection and insufficient funds fees will go from $10 to $12 each.

Wire transfers, online transfers, stop-payment requests, and even printing recent account activities at an ATM -- basically, any type of transaction that was not subject to new regulations -- is fair game for fee increases. It all gives new meaning to the phrase "cash machine."

How to avoid the sting of new banking fees
Finding the best bank for your bucks once required a simple side-by-side comparison of interest rates. These days, self-awareness is the first step in finding banking bliss (or at least not getting robbed at your own bank).

With interest rates paying such a pittance, a few visits to a foreign ATM or a dip below the minimum balance requirement can wipe out months of interest earnings. If it's been a while since you've looked at your banking habits -- and costs -- now's a good time to see whether you and your current financial institution are a good match. Some considerations:

  • How much money do you typically keep in your account? If you tend to ride the line, then your biggest consideration should be the monthly fee.
  • Do you have checking and savings accounts at the same bank? Or is your banking business spread across several institutions? Consider giving your savings, checking and/or other business to a single bank where your minimum account balance will be calculated based on all of your accounts.
  • How often do you get cash from an ATM? Is it convenient to find your bank's machines?
  • How good are you at keeping records? A bank that offers to refund a certain number of foreign ATM surcharges sounds great – but only if you're good about adhering to the limits and keeping track of your wayward banking ways.
  • Do you have direct deposits or regular transfers set up? Direct deposits are often a ticket to avoiding maintenance fees. So are automatic transfers from a savings account, at least at some institutions.
  • How often do you use your debit card? As with direct deposits, some banks encourage debit transactions (10 times a month or more, since it's more profitable for them) and will waive fees for customers who make a minimum number of transactions per month.
  • How often do you need to visit a physical branch of your bank? If you're comfortable conducting some of your business online or via mail, online banks like ING Direct charge less -- and pay interest on some accounts -- because they have less overhead costs to cover.
  • Do you pay your bills online? Check to see whether online bill payment costs extra, or if it counts as a fee-waiving activity. Also consider the costs of paper checking, and getting copies of cancelled checks sent to you physically or online.
  • Do you qualify to become a member of a credit union or community bank? Although not fee-free, the costs of banking at these community-owned institutions can be significantly less than doing business with the larger corporations. Plus, many offer free checking accounts for students and senior citizens who opt out of paper statements. Find a local bank via culookup.com, findacreditunion.com, or ICBA's community bank locator.

More on banking

Dayana Yochim owns none of the companies mentioned in this article, nor does she bank with any of them. The Fool owns shares of Bank of America, JPMorgan Chase, and Wells Fargo; and through a separate account in its Rising Stars portfolios, it also has a short position in Bank of America. The Motley Fool's disclosure policy no longer comes with a free toaster. However, can it interest you in a free piece of 3-year-old hard candy?


Read/Post Comments (8) | Recommend This Article (15)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 20, 2011, at 12:17 PM, pondee619 wrote:

    What did we expect? Congress took outlawed the fees the Banks charged so they came up with new ones. Is anyone suprised by this? Now, which scheme was better, the one outlawed or the one proposed?

  • Report this Comment On January 20, 2011, at 12:27 PM, outoffocus wrote:

    Yea because God forbid people should be charged for being irresponsible. Shame on those banks. (For those of you who dont get my sarcasm, I'm referring to the fees that were outlawed.)

  • Report this Comment On January 20, 2011, at 12:48 PM, ronbeasley wrote:

    Of course. After all, banks should develop highly secure automated systems, hire and pay employees, buy and maintain buildings, bear all the costs so you can have everything for free! What's next, free groceries for you? How about a free car, with free gas, and free rent? perish the thought that you should actually have to pay for anything.

  • Report this Comment On January 20, 2011, at 2:53 PM, DirtyTomRackham wrote:

    Find a good credit union and you can get free checking without much of a problem. These days it doesn't even have to be local to do everything you need to do.

    Most credit unions are probably willing to waive any fees to become a member as well.

  • Report this Comment On January 20, 2011, at 6:59 PM, Borbality wrote:

    I can't imagine paying for these services. Why doesn't everyone get with a credit union? I have a higher-yielding online savings account for cash I don't need and am not investing at the moment. the rest is fee-free in the credit union checking account.

  • Report this Comment On January 21, 2011, at 1:10 AM, ChrisFs wrote:

    The big banks set up those fees because they don't want to deal with smaller accounts unless they make money from it.

    My solution was to move to a smaller community bank which doesn't charge those fees and rebates my out of network ATM fees to compensate for not having as big an atm network as the big guys.

    To the people defending bank fees, I point out that it's the free market in action (you know the one that was so great before 2008, after which banks were pleading for that govt assistance).

    If you feel the big bank adds something that is worth those fees, great, if not, there's no complaint or model in the world that will prevent people from going elsewhere

  • Report this Comment On January 21, 2011, at 3:44 PM, whattadolt wrote:

    Of course. After all, banks are making record profits. Plus every dime you stick in a bank account immediately becomes fair game for the banks to use for their own profit. So of course banks should stick it to you, after all the good will and ethics they've shown us overthe past few years, their certainly entitled to it.

  • Report this Comment On January 24, 2011, at 1:34 AM, ET69 wrote:

    I got the notice of the fees from Chase and even though I met the new requirements--it was the last straw for me. I switched to a credit union---in my case BECU--and glad I did. They even pay interest on my checking account.

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