June 10, 2010
Stand up to the pesky charges -- from checked-bag costs to retirement plan expenses -- that bug you the most.
1. Being charged for not charging
What you're mad about: A few credit card issuers have started levying annual fees on less active users to encourage them to spend. Citibank, for example, slaps a $60 fee on certain cardholders unless they charge $2,400 within a year. (Spokesman Samuel Wang blames it on the "increasing costs of doing business.") And US Bank Visa Platinum dings you $40 if you don't use your card during a 12-month period.
How to fight back: Happily, such fees are the exception, not the rule. So vote with your feet, says Curtis Arnold of CardRatings.com. Look into switching to a card issued by a credit union (findacreditunion.com). Credit unions typically charge fewer fees than big banks do.
2. Parting with cash to close your HELOC
What you're mad about: Lenders have been quick to freeze or slash borrowers' home-equity lines of credit in the past few years. But if you dare close down a line yourself within the first three to four years of opening it, you'll pay from $250 to $700. Two-thirds of all lenders charge such fees, says Keith Gumbinger of HSH. He says it's because the creditor has to absorb certain closing costs.
How to fight back: Keep the line open, even if you don't plan to use it. If you must close the line -- say, because you want to refinance your mortgage -- ask your lender to waive the fee. If the same lender has your HELOC and your new mortgage, it may comply.
3. Forking over new charges for overdrafts
What you're mad about: Often banks allow you to link a savings account to your checking account so that funds can be pulled from the former if you overdraw the latter. This workaround can help you avoid nonsufficient-funds fees, now averaging $30, according to Bankrate.com. But many banks have found a workaround for your workaround: They'll charge you $10 to $20 every time they transfer your money between the accounts. Meanwhile, it costs the bank next to nothing to move the funds, says Bryan Derman of Glenbrook Partners, a financial services consulting firm. "They're charging you for what's essentially an automatic transfer!" echoes reader Zoe Dowling, whose bank (Wells Fargo) levies the fee.
How to fight back: Sign up on your bank's website or Mint.com for e-mail or text-message alerts that tell you when your checking account balance is below a certain amount. That way, you can make transfers for free yourself before an overdraft is triggered.
4. Paying to use your frequent-flier miles
What you're mad about: Can it really be called "reward travel" if you have to pay for the reward? Apparently. To redeem your miles for any flight on US Airways, you must pay a $25 to $50 fee. ("It's an effort to recoup a portion of the overhead of the program," says spokesman Todd Lehmacher.) American, United, and Continental, among others, usually make you pony up $50 to $500 one way to use miles for upgrades.
How to fight back: Stick to one airline, and try to achieve gold or platinum status (which generally involves flying at least 25,000 miles a year). That way you'll escape redemption fees, says Randy Peterson of WebFlyer.com. Don't travel that much? Consider a credit card that lets you earn miles -- specifically "elite qualifying miles" -- such as Platinum Delta SkyMiles American Express (800-223-2670). Just be sure to weigh the annual fee against the benefit you'll get.
5. Laying out too much in annuity fees
6. Paying to get credit rewards reinstated
What you're mad about: Have a reward card? Some issuers have a creative new way of punishing you for paying late: They take away the points you earned in that billing cycle -- and make you fork over money to get them back. Diner's Club charges a $15 reinstatement fee; American Express, $29. Some other issuers, including Capital One, won't let you get your points back for any price.
How to fight back: Schedule automatic payments online for at least the minimum amount due, advises Arnold. That way you'll never be late.
7. Forking over for your checking
What you're mad about: As if it's not bad enough that banks are paying next to nothing to use your savings -- the going yield is 0.2% -- they're charging you more for checking too. The average monthly cost of an interest-bearing checking account was $12.55 in 2009 vs. $11.97 in 2008, reports Bankrate.com. Some banks have minimum balances you can meet to avoid "maintenance" fees, but the balances have gone up -- to $3,400, on average, for interest checking. So it's harder to sidestep the fee. "Does it really cost the bank $15 if my balance goes from $100 to $99.99?!" asks reader Roy Kinoshita.
How to fight back: Free checking will all but disappear at big banks in coming years, predicts Greg McBride of Bankrate.com. "But it will remain the hallmark of community banks, online banks, and credit unions." Consider one of them. If you want to stick with a big bank, ask about deals for employees of your company; sometimes minimum-balance requirements are nixed if you have direct deposit. Finally, get regular checking rather than the interest-bearing kind; fees are much lower ($1.77 a month, on average).
8. Paying to shut a brokerage account or IRA
9. Helping fund mutual fund marketing
10. Handing over big bucks to check baggage
What you're mad about: With airlines charging for everything from blankets and pillows (American, Allegiant, JetBlue) to seat reservations (Spirit, Airtran, British Airways), it's a wonder the burned coffee is still free. Your biggest complaint about the airlines, however, is the ever-increasing luggage fees. Only JetBlue and Southwest don't charge to check your first bag. At other airlines, the fees on domestic flights range from $15 to $45 for your first checked bag, $25 to $35 for your second. (You may pay even more if you check the bags at the airport instead of online.) For a family of four on a roundtrip, those fees can easily total $200. To add insult to injury: Spirit announced that on Aug. 1 it will begin charging $20 to $45 for each carryon.
How to fight back: If you can't fly a baggage-fee-free airline, aim for elite status on the airline you use most often. That gets you at least one free checked bag per flight. Or simply pack lightly enough that you can avoid checking altogether. You'll need a soft-sided carryon bag with exterior dimensions totaling no more than 45 inches; length should be no more than 21 inches, says Doug Dyment, founder of the website OneBag.com.
11. Plunking down to hang up on your cell carrier
What you're mad about: Agreeing to a cellphone contract is sort of like signing over your soul to the devil: You know there will be hell to pay if you break your end of the deal. In this case you'll owe $200 to $350. Such fees usually subsidize the cost of the handset you bought at a low price, says Bob Sullivan, author of Stop Getting Ripped Off.
How to fight back: Try to talk your way out of the fee, mentioning examples of poor service you've received (keep records and cite them). Customer rep won't budge? If you can stand it, stick with the carrier a while longer. Termination fees are generally pro-rated, so the longer you hold out, the less you'll pay. Next time consider a prepaid phone, which doesn't require a contract. It's generally a good deal if you use it less than 400 minutes a month during peak hours, says Sullivan.
12. Paying the price when a fund balance dips
13. Giving your cash away at the ATM
What you're mad about: The cost of using an ATM that doesn't belong to your bank just keeps going up and up. You'll pay one charge to your own bank (average: $1.32) and another to the bank whose ATM you're using (average: $2.22). Big banks tend to charge more than smaller ones.
How to fight back: Some major banks, including Bank of America, Chase, and Wells Fargo, have smartphone apps that help you locate ATMs on the go. Use them. Have an iPhone? Download the free ATM Hunter, which finds locations for thousands of banks. If you can't be bothered to go out of your way for the right machine, choose a checking account from an online bank that refunds ATM charges. Charles Schwab stands out: Unlike some other online banks, it doesn't impose a limit on how many fee-free transactions a month you can make.
14. Coughing up to chat with a human being
What you're mad about: Time was, the biggest obstacle in reaching a live customer service rep was getting through an automated phone system. Now many businesses -- from airlines to credit card companies to computer manufacturers -- have added another hurdle, in the form of a fee. For example, you'll pay $5 to order a pay-per-view movie from DirecTV by phone; HSBC requires you to pay $15 to make a credit card payment with a live agent. Especially when you're already shelling out money for something, "to pay to talk to a human is a raw deal," says Doug Heller of Consumer Watchdog, a nonprofit advocacy group.
How to fight back: First try to do your business online, which is what firms want you to do anyway. If that doesn't work, make the call. "The first tier or two of customer service isn't going to be empowered to relieve you of the fees," Heller says. So ask for a manager. Make a reasoned argument for why you need assistance. Note that you are a good customer who either is spending a lot of money (on a plane ticket, for example) or pays the company each and every month (for cable TV, say).
15. Shelling out big bucks on retirement plans
Stand up to the pesky charges -- from checked-bag costs to retirement plan expenses -- that bug you the most.
1. Being charged for not charging
What you're mad about: A few credit card issuers have started levying annual fees on less active users to encourage them to spend. Citibank, for example, slaps a $60 fee on certain cardholders unless they charge $2,400 within a year. (Spokesman Samuel Wang blames it on the "increasing costs of doing business.") And US Bank Visa Platinum dings you $40 if you don't use your card during a 12-month period.
How to fight back: Happily, such fees are the exception, not the rule. So vote with your feet, says Curtis Arnold of CardRatings.com. Look into switching to a card issued by a credit union (findacreditunion.com). Credit unions typically charge fewer fees than big banks do.
2. Parting with cash to close your HELOC
What you're mad about: Lenders have been quick to freeze or slash borrowers' home-equity lines of credit in the past few years. But if you dare close down a line yourself within the first three to four years of opening it, you'll pay from $250 to $700. Two-thirds of all lenders charge such fees, says Keith Gumbinger of HSH. He says it's because the creditor has to absorb certain closing costs.
How to fight back: Keep the line open, even if you don't plan to use it. If you must close the line -- say, because you want to refinance your mortgage -- ask your lender to waive the fee. If the same lender has your HELOC and your new mortgage, it may comply.
3. Forking over new charges for overdrafts
What you're mad about: Often banks allow you to link a savings account to your checking account so that funds can be pulled from the former if you overdraw the latter. This workaround can help you avoid nonsufficient-funds fees, now averaging $30, according to Bankrate.com. But many banks have found a workaround for your workaround: They'll charge you $10 to $20 every time they transfer your money between the accounts. Meanwhile, it costs the bank next to nothing to move the funds, says Bryan Derman of Glenbrook Partners, a financial services consulting firm. "They're charging you for what's essentially an automatic transfer!" echoes reader Zoe Dowling, whose bank (Wells Fargo) levies the fee.
How to fight back: Sign up on your bank's website or Mint.com for e-mail or text-message alerts that tell you when your checking account balance is below a certain amount. That way, you can make transfers for free yourself before an overdraft is triggered.
4. Paying to use your frequent-flier miles
What you're mad about: Can it really be called "reward travel" if you have to pay for the reward? Apparently. To redeem your miles for any flight on US Airways, you must pay a $25 to $50 fee. ("It's an effort to recoup a portion of the overhead of the program," says spokesman Todd Lehmacher.) American, United, and Continental, among others, usually make you pony up $50 to $500 one way to use miles for upgrades.
How to fight back: Stick to one airline, and try to achieve gold or platinum status (which generally involves flying at least 25,000 miles a year). That way you'll escape redemption fees, says Randy Peterson of WebFlyer.com. Don't travel that much? Consider a credit card that lets you earn miles -- specifically "elite qualifying miles" -- such as Platinum Delta SkyMiles American Express (800-223-2670). Just be sure to weigh the annual fee against the benefit you'll get.
5. Laying out too much in annuity fees
6. Paying to get credit rewards reinstated
What you're mad about: Have a reward card? Some issuers have a creative new way of punishing you for paying late: They take away the points you earned in that billing cycle -- and make you fork over money to get them back. Diner's Club charges a $15 reinstatement fee; American Express, $29. Some other issuers, including Capital One, won't let you get your points back for any price.
How to fight back: Schedule automatic payments online for at least the minimum amount due, advises Arnold. That way you'll never be late.
7. Forking over for your checking
What you're mad about: As if it's not bad enough that banks are paying next to nothing to use your savings -- the going yield is 0.2% -- they're charging you more for checking too. The average monthly cost of an interest-bearing checking account was $12.55 in 2009 vs. $11.97 in 2008, reports Bankrate.com. Some banks have minimum balances you can meet to avoid "maintenance" fees, but the balances have gone up -- to $3,400, on average, for interest checking. So it's harder to sidestep the fee. "Does it really cost the bank $15 if my balance goes from $100 to $99.99?!" asks reader Roy Kinoshita.
How to fight back: Free checking will all but disappear at big banks in coming years, predicts Greg McBride of Bankrate.com. "But it will remain the hallmark of community banks, online banks, and credit unions." Consider one of them. If you want to stick with a big bank, ask about deals for employees of your company; sometimes minimum-balance requirements are nixed if you have direct deposit. Finally, get regular checking rather than the interest-bearing kind; fees are much lower ($1.77 a month, on average).
8. Paying to shut a brokerage account or IRA
9. Helping fund mutual fund marketing
10. Handing over big bucks to check baggage
What you're mad about: With airlines charging for everything from blankets and pillows (American, Allegiant, JetBlue) to seat reservations (Spirit, Airtran, British Airways), it's a wonder the burned coffee is still free. Your biggest complaint about the airlines, however, is the ever-increasing luggage fees. Only JetBlue and Southwest don't charge to check your first bag. At other airlines, the fees on domestic flights range from $15 to $45 for your first checked bag, $25 to $35 for your second. (You may pay even more if you check the bags at the airport instead of online.) For a family of four on a roundtrip, those fees can easily total $200. To add insult to injury: Spirit announced that on Aug. 1 it will begin charging $20 to $45 for each carryon.
How to fight back: If you can't fly a baggage-fee-free airline, aim for elite status on the airline you use most often. That gets you at least one free checked bag per flight. Or simply pack lightly enough that you can avoid checking altogether. You'll need a soft-sided carryon bag with exterior dimensions totaling no more than 45 inches; length should be no more than 21 inches, says Doug Dyment, founder of the website OneBag.com.
11. Plunking down to hang up on your cell carrier
What you're mad about: Agreeing to a cellphone contract is sort of like signing over your soul to the devil: You know there will be hell to pay if you break your end of the deal. In this case you'll owe $200 to $350. Such fees usually subsidize the cost of the handset you bought at a low price, says Bob Sullivan, author of Stop Getting Ripped Off.
How to fight back: Try to talk your way out of the fee, mentioning examples of poor service you've received (keep records and cite them). Customer rep won't budge? If you can stand it, stick with the carrier a while longer. Termination fees are generally pro-rated, so the longer you hold out, the less you'll pay. Next time consider a prepaid phone, which doesn't require a contract. It's generally a good deal if you use it less than 400 minutes a month during peak hours, says Sullivan.
12. Paying the price when a fund balance dips
13. Giving your cash away at the ATM
What you're mad about: The cost of using an ATM that doesn't belong to your bank just keeps going up and up. You'll pay one charge to your own bank (average: $1.32) and another to the bank whose ATM you're using (average: $2.22). Big banks tend to charge more than smaller ones.
How to fight back: Some major banks, including Bank of America, Chase, and Wells Fargo, have smartphone apps that help you locate ATMs on the go. Use them. Have an iPhone? Download the free ATM Hunter, which finds locations for thousands of banks. If you can't be bothered to go out of your way for the right machine, choose a checking account from an online bank that refunds ATM charges. Charles Schwab stands out: Unlike some other online banks, it doesn't impose a limit on how many fee-free transactions a month you can make.
14. Coughing up to chat with a human being
What you're mad about: Time was, the biggest obstacle in reaching a live customer service rep was getting through an automated phone system. Now many businesses -- from airlines to credit card companies to computer manufacturers -- have added another hurdle, in the form of a fee. For example, you'll pay $5 to order a pay-per-view movie from DirecTV by phone; HSBC requires you to pay $15 to make a credit card payment with a live agent. Especially when you're already shelling out money for something, "to pay to talk to a human is a raw deal," says Doug Heller of Consumer Watchdog, a nonprofit advocacy group.
How to fight back: First try to do your business online, which is what firms want you to do anyway. If that doesn't work, make the call. "The first tier or two of customer service isn't going to be empowered to relieve you of the fees," Heller says. So ask for a manager. Make a reasoned argument for why you need assistance. Note that you are a good customer who either is spending a lot of money (on a plane ticket, for example) or pays the company each and every month (for cable TV, say).
15. Shelling out big bucks on retirement plans
Closed November 2010
Comment