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12 tips for managing fees

Whether you’re just starting out or already have a checking account set up, it’s time to start looking at fees.

On-base operating agreements require banks and credit unions to provide financial education to troops on their base — even if you’re not a customer — so if you’re on an installation, take advantage of that education.

First and foremost, you should evaluate your own banking needs and habits and see which checking account features are the best match.

Here are 12 tips for managing fees:

1. Assess what you pay now. Pull out recent checking statements, add up the fees you paid, and look at why they were charged. Did you pay for using ATMs, for overdrawing your account, for regular monthly checking fees? Be honest about your habits. Decide what’s costing you the most money and then resolve to avoid it.

2. Do online research. This is not always easy. Sometimes you’ll find information readily at hand — for example, the Armed Forces Bank website has all of its checking account options, fees and terms under “Accounts.” In other cases, you may have to look under “Terms and Conditions,” or you may not be able to find these details online. If the financial institution’s website has a search function, search for “fees” or “terms.”

3. Ask about fees upfront. State and federal “truth in savings” laws require financial institutions to disclose all account fees in advance. If they’re not readily available on a website, then you should call, email or visit a branch to ask for it. Evaluate fees other than overdraft, such as ATM fees and the bank’s charges for using another bank’s ATM. How extensive is the bank’s ATM network? Would you pay fees for using a debit card?

4. Check around for free checking. Some banks still offer basic free checking accounts. Some — including some that operate on military bases — don’t charge a monthly fee if you have direct deposit. Look at the fine print, though. Do you have to maintain a minimum balance to avoid paying fees?

5. Examine overdraft policies closely. Be honest about your habits, and consider the possibility that you’ll make mistakes in the future. Is the financial institution’s fee $18 per overdraft, $35 or more? Can it be charged three, five, seven or unlimited times in a day if multiple debits or checks post? Some banks don’t charge overdraft fees if the item is under a certain amount. But some institutions charge extra fees if the account remains overdrawn for a certain number of days.

Consider carefully whether you want the bank’s overdraft protection for ATM and debit transactions. If you do, you give the bank the authority to pay debit and ATM transactions that will overdraw your account — and you allow the bank to charge the fees. If you don’t, the transaction will be denied at the cash register or at the ATM.

6. Gauge how the bank helps you avoid overdraft fees. Does the bank allow you to link your checking account to a savings account or credit card account to avoid overdrafts? What is the charge for transferring money from one of these accounts if they cover your overdraft?

Does the institution allow you to apply for a line of credit that will be tapped if you overdraw your account? If so, what is the interest rate?

Some banks, such as Chase and USAA, offer text or email alerts if an account balance is getting low.

7. Get recommendations. Ask friends and colleagues to talk about their banks and credit unions, both the good and the bad.

8. Look outside the gates. Consider online banks in your comparisons. Their operating costs may not be as high, and their fees may be lower.

9. Consider credit unions. Their expenses are lower, partly because they receive tax exemptions, so they may have lower fees — for example, Navy Federal Credit Union’s average fee on deposit accounts for 2010 was $35.27; Pentagon Federal Credit Union’s was $9.31. In addition to that, among Navy Federal’s free accounts is its “Active Duty Checking,” which earns dividends, requires no minimum balance to avoid a monthly service fee, and provides ATM fee rebates and free checks for life. The overdraft fee is $25 and can be charged up to four times a day.

Pentagon Federal offers checking with no monthly service fee if there is a direct deposit of net pay; otherwise, a minimum daily balance of $500 is required to avoid a $10 monthly fee. Pentagon Federal waives overdraft charges on checking accounts for those in the active, National Guard and reserve components up to two times every three months. When a checking account is opened at the credit union, a $500 line of credit is provided; customers can apply for a higher amount if they choose.

10. Look beyond the fees. A bank with high average fees may have benefits that outweigh the risks. Does it offer free checking or a better deal on services, interest rates or fees if you consolidate different accounts?

11. Stay on track. No matter what institution you choose, keep track of every transaction to avoid overdrafts and to ensure there are no errors when you compare it to the financial institution’s statement.

12. Be vigilant. In the ever-changing world of fees, you must open and read everything your institution sends you, including the fine print, to avoid making financial moves that could cost you. If a change in policy doesn’t suit you, shop around.