FINANCE Banks' hidden fees hit a nerve

Consumer groups are angry as bank fees rise.
KNIGHT RIDDER NEWSPAPERS
From bank accounts and mortgages to credit cards and car loans, let the buyer beware: Financial fees are on the rise. And many are just waiting to blind-side you.
Sometimes they are buried in fine print, wrapped in complicated verbiage or lost amid stacks of documents, consumer groups say.
And though bankers claim they are rare, the so-called hidden fees of financial services have contributed to banks' double-digit growth in fee income in recent years.
Charge for phoning
That comes as no surprise to customers like Deanna Botts, who recalled paying a number of unexpected fees. One of the most annoying charges, she said, was for phoning the bank too many times.
"I just don't call them anymore," said the Oviedo, Fla., resident. "I found out they let us have a few calls free, then you get charged," Botts said. "A lot of times you don't know what they'll charge for. They'll slip something in with your statement, and you don't realize it right away."
Such episodes occur too often in the nation's financial-services industry, consumer advocates say. They wage a perpetual war with financial institutions over what and how information should be disclosed to customers.
Consumer groups constantly push for regulations that would cap fees and require better upfront disclosures. Bankers argue that the vast majority of institutions charge reasonable fees and provide clear disclosures: It's just that some consumers never read them. Besides, sometimes well-meaning legislative reforms can backfire by adding costs and inconvenience for customers, they say.
"You don't want to put in place any kind of restrictions on everyone to address the problems caused by a very small minority," said Rob Rowe, regulatory counsel for the Independent Community Banks of America, a trade group based in Minnesota. "In the long run, you end up hurting everyone."
More prevalent
Consumer advocates are not convinced. They allege that these hidden fees have actually become more prevalent in recent years. The reason? Low interest rates have put a squeeze on interest income, so banks have increasingly turned to fees to boost revenues. As a result, many types of fees have emerged.
Among them: There are charges for talking to account representatives, using telephone banking, closing an account within 90 days of opening it and having a credit-card account, even if there is no balance.
Typical fees such as those for using out-of-network automated tellers and insufficient fund charges also continue to rise, according to Bankrate.com, a financial consumer research firm based in North Palm Beach, Fla. Bankers argue, however, they have actually worked to minimize the rise in fees, despite the difficult economy of recent years. They have also created "free checking" accounts and other ways to make it simpler for customers to avoid fees, bankers said.
Overall, banks reaped $31.8 billion in account-service fees in 2003, up 34 percent from three years before, the Federal Deposit Insurance Corp. reported. Most fee increases have outpaced inflation during that period, consumer analysts say.