Shoppers: Keep eye on revised fees

With the holiday-shopping season approaching, it could pay to be aware of some of the subtle changes that make gift cards, checking accounts and other bank accounts a bit different this time around.

The changes aren't tectonic, but they could result in higher fees as well as added protections. Most stem from new regulations over the past year, including the Credit Card Act and increased federal oversight of interchange fees, which merchants pay to banks.

On the plus side for consumers, gift cards have become a better deal. The Card Act, which made credit cards more transparent and prohibited certain fees, also added some protections on gift cards.

Bill Hardekopf of Low cards.com cites the following key benefits:

- Expiration dates. The dollar values on gift cards can be used for at least five years from the date the card was purchased.

- Replacements. If your card expires with unspent money on it, you can request a replacement card at no cost. The relevant expiration date applies to your funds and not the card itself.

- Fees. Dormancy, inactivity or service fees apply only if a card hasn't been used for at least 12 months - and only if the fees are clearly disclosed.

"Gift cards are easy to give, but they are also easy to forget. They may hide in your wallet or drawer for a long time," Hardekopf said. "The Card Act helps to preserve the value of the card so that fees can't erode the value of the card before they are used."

Conversely, the new legislation also created some restrictions and costs. This year, for example, you must authorize overdraft protection on ATM and debit accounts. Otherwise, your transactions will be declined if you lack sufficient funds.

That's not necessarily bad, since it prevents you from incurring overdraft fees, but it can cause inconveniences.

Meanwhile, overdraft fees and many other common banking charges are on the upswing.

Overdraft fees now average $30.47, a record high, reports researcher Bankrate.com. That's up 3 percent from a similar study conducted last year. At $32, average overdraft fees in metro Phoenix are among the highest in the nation.

That's not all. If you find yourself in a mall in need of cash and use another bank's automated teller machine, you'll pay about $2.33 on average for the privilege, up 5 percent from the 2009 survey. Your own bank could tack on its own fee, averaging $1.41, for going outside its network.

Another key finding from Bankrate.com's survey of 247 banks is that fewer institutions now offer free checking without minimum-balance or other requirements. The latest tally shows 65 percent of institutions offer free checking, down from 76 percent in 2009.

Declining bank revenue from heightened regulation is to blame for this higher-fee trend, said Greg McBride, senior financial analyst at Bank rate.com. He cited both increased oversight of interchange fees and the new rules banning overdraft fees unless customers consent to them. Both actions have or will cut into bank debit-card revenues, which have helped to subsidize free checking accounts.

While bank fees can take some cheer out of the holiday season, most of these costs are avoidable.

"By exercising a little bit of caution, consumers can save themselves a lot of money and grief," McBride said.

Those tips include sticking with in-network ATMs and avoiding overdraft fees by making sure you have enough cash to cover a purchase.

A majority of consumers, 53 percent, reported paying no monthly bank fees, according to a recent survey by the American Bankers Association. Another 25 percent paid $6 or less.

The ABA also released a survey recently underscoring the growing popularity of dealing with banks online. More respondents, 36 percent, said they now prefer to deal with banks over the Internet than by visiting branches (25 percent), using ATMs (15 percent), dealing through the mail (8 percent) or any other method. The online response is up from 25 percent in last year's survey.

People who bank online might find it worthwhile to set up alerts - free text or e-mail messages that inform you when certain activities take place.

For example, you can request a notice if your account shows purchases above a certain dollar amount, if your credit-card balance exceeds a predetermined sum or if the mailing address or phone number linked to your account changes.

"(Alerts) can help you avoid some painful late fees or over-the-limit fees, as well as notifying you of possible fraudulent activity," Hardekopf said.

by Russ Wiles The Arizona Republic Nov. 7, 2010 12:00 AM



Shoppers: Keep eye on revised fees