At a time when many consumers are struggling financially, some banks are increasing certain fees to all-time highs, according to a new Bankrate.com survey of nearly 500 bank branches.
Suzanne Grenoble saw it for herself when a bank charged her daughter $650 in overdraft fees. Her daughter's checking account was overdrawn by about $100 after a series of $3 and $4 debit card charges.
"The bank got greedy," Grenoble said. "I felt like Alice in Wonderland, like I fell through the looking glass. Nothing makes sense anymore."
The average overdraft fee is now $29, which is 34 percent higher than a decade ago. And you could pay that fee over and over again. Some banks process the largest check you write in a day first, which can make several smaller checks of yours bounce. That could result in multiple fees for multiple overdrafts at the bank.
But the charges for bounced checks aren't the only things on the rise. The survey found ATM fees are higher too. If you take out cash from an ATM other than your bank it could cost you $3.43 in fees to the other bank and your own. If you withdraw $40, that's like paying more than 8 percent interest.
The banking industry points out ATM fees and overdraft fees are totally avoidable if you plan ahead and manage your money well. An American Bankers Association study found 65 percent of consumers pay $3 or less per month to do their banking. The bankers association says bank fees overall are down, because so many banks now offer low and no cost checking accounts.
"Fees are reducing. I mean the cost of having a monthly checking account fee has gone down dramatically," said the association's Diane Casey-Landry.
But a government study earlier this year found many banks do a poor job of informing customers about the fees they may face after they open their account.
For example, cashier's checks used to be free. Now, they're often $10. Copies of old checks are $5 and making a payment by phone is as much as $15. Stopping payment on a check could cost a little less than $20 and if you deposit somebody else's bad check that could cost you $12.
Finally, if you set up a line of credit to cover overdrafts in an effort to save money, you could pay as much as $10 every time you activate it — plus interest.
"I would suggest if you don't like the fees that your bank is charging, that you need to go out and shop around. With 8,500 institutions out there, there's plenty of choice, plenty of opportunities for you to set up the account that is best for you," Casey-Landry said.
A credit union may be an option for those trying to avoid high bank fees. You should see whether you have access to a member-owned credit union because credit union fees are typically much lower. Many online banks have lenient ATM fee policies, because that is how you access your funds. You could also try getting cash back when you use a debit card to purchase something at a store.
Finally, even though overdraft protection costs money, it is still far cheaper than bounced check fees. All you do is link your checking account to a savings account, credit card or line of credit. If you overdraw your checking account, the bank takes the money out of the other account.
It's best to choose this type of overdraft protection rather than the "courtesy overdraft" or "bounce protection" that some banks offer, because often those services have expensive strings attached.