Last week, Bank of America caught a lot of flak for introducing a bunch of fees on their checking accounts. This week, it’s Citi’s turn and the fees will start in December.

• If you have a mid-level Citibank account, you’ll get a $20 per month fee if you don’t maintain a balance of at least $15,000 in your accounts, up from $6,000.
• EZ Checking account holders will now see a $15 per month fee if they don’t maintain at least a $6,000 balance and the EZ Checking package is getting phased out.
• Basic Banking accounts will see a fee increase of $2 to $10 per month, which you can avoid if you maintain a balance of $1,500 or make one direct deposit and one automatic online payment per month.

Today it’s Citi, last week it was Bank of America, tomorrow it will be another brick and mortar bank. It’s only a matter of time. If you want to avoid being forced to change banks because you want to avoid fees, start moving your banking now.

(Photo: redvers)

When my sister was in college, she used the ATM a lot. Whenever she needed some money, she’s go to the machine and pull out $20. Sometimes she’d check her balance. Then one day she realized, or my dad realized, that she was using an out of network ATM which charged around $5-7 (combined) each time she withdrew money. For every $20 she withdrew, she was paying a $7 fee. Every time she checked her balance, that’s another fee. Over the course of a semester, she racked up around $100 in unnecessary fees. In her case, she wasn’t aware it was happening but it’s a hard pill to swallow nonetheless.

Fortunately, with a few quick tips, being dinged by ATM fees is completely avoidable.

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When it comes to investing, there are two things you can control – how much you pay in fees and how much you pay in taxes. With fees, it’s pretty straightforward because fees are disclosed up front. A brokerage charges you $x per trade, a mutual fund company pulls x% in expenses, and both are required by law to make those very clear.

Taxes are slightly different. The tax code can be complicated and it doesn’t help that there are so many different “types” of investment accounts from 401(k)s to Roth IRAs to your plain vanilla brokerage account. When it comes to investing, what you buy and where can be just as important as what you buy.

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When it comes to making money for a bank, there are few items as effective as a fee. Whether you have an overdraft on your account, are seeing a new annual fee on your credit card, or if you now have to pay a monthly service fee on your savings account when you balance drops, it is no fun to pay fees. However, fees seem to be multiplying in number; everyone seems to be charging fees.

You can, though, ask for a fee to be rescinded. It might not always work, but it never hurts to ask — especially if you are a good customer. I’ve had late payment fees waived on credit cards, as well as overdraft fees rescinded om my checking account. If you want a bank fee rescinded, you can increase the chance that it will happen by keeping the following in mind:

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The financial reform bill enacted some much needed reform in the banking industry, one of which was a crackdown on the overdraft fees banks charge. Overdraft fees were, and probably will continue to be, a multi-billion dollar revenue stream for banks and with these new regulations, it’s not surprising that the burden of earning that kind of money will fall on other fees. In Bankrate’s recent annual Checking Study, they discovered that ATM surcharges were one of the unlucky carriers.

ATM surcharges have been on the rise, increasing nearly every year since 1998, and this year the surcharge will be, on average, $2.33. It’s an increase from $2.22. (this is the fee an ATM will charge you if you withdraw money with a card outside their network.

Remember, ATM fees rarely come by themselves, they prefer to travel in pairs. The fee that your bank will charge you, for using another ATM, will average $1.41 (from $1.32). So if you use a non-network ATM, expect the other bank to charge you $2.33 and for your bank to charge you $1.41. How do you avoid this?

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Remember a few years ago when banks started “reordering” debits from your checking account? They repeatedly said it was for your own good, putting the largest debits first and then dinging you an overdraft fee for every overdraft? Their explanation seemed reasonable. You’d much rather your mortgage payment go through than for the check to bounce, right?

Unfortunately, while it seemed like they were doing you a favor, they were really just padding their bottom lines because by processing the largest checks first, you were more likely to overdraft. If they processed them in the order they were received, it wouldn’t maximize the likelihood you overdrew your account. By processing the largest first, you maximize the probability a $5 debit charge is going to net the bank a $35 overdraft fee.

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Nearly three years ago, I talked about how free checking isn’t really free because you are earning 0% interest on your money there. Today, as I’m reading The Big Short by Michael Lewis, I reached a passage in which Lewis shares an anecdote at a lunch where Herb Sandler, the CEO of Golden West Financial Corporation shared his thoughts on “free checking.”

Sandler said he didn’t believe in free checking because “it was really a tax on poor people – in the form of fines for overdrawing their checking accounts. And that banks that used it were really just banking on being able to rip off poor people even more than they could if they charged them for their checks.”
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My wife and I bought our house five years ago. I remember looking over the list of closing costs and seeing a line for title insurance. Title insurance, which costs in the neighborhood of a few thousand dollars, is something that boggles my mind even to this day. It’s an example of something that is a 100% legal and 99% rip off. There are some things in life that are obvious rip offs, like pay day loans, and then there are others that aren’t so obvious. Today, I wanted to point out a few of the biggest legal ripoffs in the financial world. Some of them are completely avoidable. Others, however, are not.

In this article, we take aim at bank fees, extended warranties, title insurance, college textbooks, and car rental insurance.
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