Thanks to the Credit Card Accountability, Responsibility, and Disclosure (Credit CARD) Act of 2009, which outlawed certain types of fees, banks, and credit card issuers are getting more and more creative about how they charge consumers.
Certified Financial Planner, Kimberly Foss, who founded the Roseville, California-based Empyrion Wealth Management, has heard complaints about annoying new fees from her clients and even her college-aged daughter. “It’s insane!” says Foss. “She uses a debit card, and after three withdrawals in a month, she was charged $25 for excess withdrawals.”
In addition to excess withdrawal fees, here are a few others popping up:
Reward recovery fee
If you have a rewards credit card and pay your bill even one day late, the card issuer may wipe out the rewards you’ve accrued and charge you a fee to get them reinstated. Run the numbers before paying this fee. “If it’s 100 points, that’s probably not worth it,” says Foss, “but obviously if you’re going to get 10,000 points, you might consider the fee.” Even if you pay your credit card bill on time, you might still pay a rewards redemption fee to actually use your rewards.
Foreign transaction fee
Some credit card issuers tack on a foreign transaction fee of about 3% when you buy something from outside the country. This can happen even if you’re shopping online with a foreign retailer and the purchase is in your local currency. If you travel internationally on a regular basis, you might consider getting a credit card that doesn’t charge a foreign transaction fee. Otherwise, you can sometimes bypass the fee by cashing in the cash or traveler’s checks in the local currency.
Payment protection insurance is sometimes sold as an add-on product in case the borrower dies, loses a job, or becomes disabled. “Those are quite costly so make sure you know what you’re getting into before you buy,” says Foss. Better yet, if you maintain a low credit card balance, you may not need payment protection at all.
Paper statement fee
Some banks now charge account holders to receive a monthly statement in the mail or offer incentives to those who opt into e-statements. For young, computer-literate consumers, going paperless is an easy way to avoid this fee. But Foss says she has older clients who don’t own computers or aren’t as comfortable using them.
Monthly maintenance fee
Some banks now charge debit or savings account holders a monthly fee for the privilege of holding their money. However, many banks waive this fee for account holders who maintain a certain minimum balance, get direct deposit, or meet other criteria.
How to avoid those fees
Not happy about a fee you’re getting charged? Foss suggests following these steps to prevent those pesky fees from eating away at your money:
Read the fine print
Most of the time, fees are outlined in the fine print when you sign up for a bank account or credit card, but few people take the time to read it. “You should read it because those fees sneak up on you,” says Foss. Also, monitor your statements so you’ll know if you’re getting charged new fees.
Call to negotiate
Ask if there’s anything you can do to have the fee waived. For instance, Foss’ daughter was able to stop the excess withdrawal fees by linking a checking account to her card and maintaining a minimum balance in her savings account.
Use your leverage, especially if you have a long history with the bank or credit card issuer. Foss suggests saying, “I’ve been a long-standing customer of the bank, and I really don’t want to leave you, because I’ve been happy with your services in the past. Is there some way we can negotiate this?”
If that doesn’t work, ask to speak with a supervisor or say, “Is there a way I can work with you without canceling my card?” says Foss. “A lot of times those words will get you to the next level.”
Switching banks or credit cards isn’t the most convenient option, but if all else fails, shop around for a bank or credit card that has fewer fees attached.