smart spending

5 big bills you can cut fast

3. Banking and credit 
Using money shouldn't bankrupt you. Yet individuals pay banks, brokerages, credit card companies and other vendors a slew of extra fees, charges, interest and penalties.

One recent study by the Government Accountability Office and the Federal Deposit Insurance Corporation, or FDIC,  found that Americans spend $36 billion annually on bank fees alone. That's up from $24.4 billion in 2000.

Meanwhile, Consumer Reports estimates Americans spend $216 billion a year on fees for personal financial services, from banking to mortgages.

Don't just take these fees and rate hikes lying down. For example, if your lender hikes your credit card rate, call to have it lowered. You've got a 50-50 chance of getting resolution, according to a consumer study by U.S. Public Interest Research Groups, or U.S. PIRG.

"Credit card companies will routinely raise your rates to see if they can get away with it, so you have to be vigilant," says Ed Mierzwinski, consumer program director at U.S. PIRG.

When it comes to some fees, you may be your own worst enemy. For example, spend more than your credit limit these days and you'll be allowed to shop. The catch: You'll owe an over-limit fee, which typically runs $39.

"Keep a healthy cushion (between) what you're allowed to spend and what you (actually) spend," said Jim Campen, executive director of Americans for Fairness in Lending.

Other tips for keep your banking and borrowing costs low include:

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  • Comparison shop. Switch banks, credit cards, even brokerage accounts that drain your finances by switching to competitors offering better deals. It's easy to find the best offers using online Bankrate's "Compare Rates" tool.
  • Read the fine print. Pay attention to requirements that could wind up costing a bundle. A free checking account may sound appealing, but is there a minimum balance requirement? If you can't meet it, you may wind up paying fees that make that free deal pricier than you thought.
  • Watch out for ATMs. Whenever possible, pull cash out of your ATM in larger amounts to reduce repeat visits to the machine. According to Bankrate's 2007 survey of ATM fees, the average ATM fee for nonaccount holders was $1.78. However, some banks charge more. Tack on the foreign use penalty your own bank levies when you use a competitor's ATM and you could well be spending nearly $5, or 25 percent of that $20 you grabbed on the go.
  • Chuck the debit card. Putting away the debit card lowers the odds of triggering courtesy overdraft protection fees. They kick in when you use a debit card and make purchases that exceed your account balance. Overdraft fees now average $34 per transaction, or $17.5 billion annually in the United States, according to the Center for Responsible Lending.
  • Pay on time/beware of default rates. Miss a payment deadline and chances are you'll wind up paying hefty fines. In fact, if you're late on one bill with any creditor, your other creditors can legally use that tardy track record to jack up interest rate they charge you. When you get bills, mark their due date on a calendar or set up automatic payments so you don't miss deadlines.
  • Scrutinize statements. More than two-thirds of lenders, 77 percent, say they can change rates "at any time for any reason," according to Consumer Action. So even if you pay on time each month and think you're an ideal customer, study your statement and look at the fees, your interest and other unexpected changes that can cost a bundle.

For more on fees and how to avoid them, read the Bankrate feature "Here come the fees."

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