Why Your Checking Account Is Getting More Expensive

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Armies of lobbyists employed by the respective industries are fighting this out in Washington, but banks are already laying the groundwork for making up that potential lost revenue. Banks are also trying to sway public opinion in their favor by engaging in a few scare tactics like charging $5 for an ATM withdrawal or threatening to cap debit card purchases at $50. The idea is that we’re supposed to believe banks will be forced to take these kinds of draconian measures if the retail industry gets its way. (In reality, experts say, these doomsday scenarios won’t come to pass.)

Between the fee creep and the political grandstanding, you’re justified if you’re a little ticked off — or really fed up — with your bank right now. But there are a few steps you can take to keep your sanity and your money.

First of all, free checking does still exist, generally at smaller banks and credit unions. “We still see free checking accounts out there,” says Linda Sherry, director of national priorities for advocacy group Consumer Action. “So far, their demise has been greatly exaggerated.” Yes, changing banks is a big step and it can be a colossal pain if you have a lot of bills set up to pay automatically, but think of it as your nuclear option. At the end of the day, you can always take your business elsewhere.

[time-link title=”(Read Swampland’s article about the political battle between banks and retailers over swipe fees)” url=http://swampland.time.com/2011/04/28/clash-of-the-titans-banks-vs-retailers-on-swipe-fees/]

If you want to stick with your current bank, you can generally have the monthly maintenance fee waived by keeping a minimum balance in the account or having a certain dollar amount direct deposited each month. Keep an eye on your mail, though; banks switch up these amounts all the time.

If you live paycheck to paycheck, there are cheaper options than overdraft protection. At most big banks, you can link your checking account to a savings account or line of credit; if a purchase is going to put you in the red, the bank will pull from that secondary source for the funds. There’s generally a $5 or $10 transfer fee each time you do this, so you might want to consider setting up email or text alerts to let you know when your balance is heading toward zero. The alerts will also give you a heads-up if someone’s dipping into your account fraudulently; the down side of this transfer tool is that if a thief gets their hands on your account information, they can run through not only the money in your checking account, but the savings or line of credit cushion, as well.

Also, be aware that if you opt for overdraft protection, it won’t keep you from bouncing a check and it doesn’t apply to payments that are withdrawn from your account automatically. According to Kathleen Day, spokeswoman for the Center for Responsible Lending, 64 percent of the people who opt in for overdraft protection now do so because they erroneously believe overdrawn checks are covered.

You can avoid fees for hard copies of your statements, check images and the like by going paperless. Download and save PDFs of your monthly “paperwork,” and save them in a secure folder on your computer. (To be extra-safe, copy the info to an external hard drive in case your machine has a meltdown.) You can dodge non-network ATM fees by getting cash back when making a purchase; while some retailers charge for this, many don’t. Finally, read your statements carefully. Consumer advocates point out that many fees are poorly disclosed; if a new fee appears on your statement, you have a shot at getting it reversed if you call your bank promptly.

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