Breaking Free of Fees, Other Expenses

(By Tim Grajek For The Washington Post)
By Joan Goldwasser
Kiplinger's Personal Finance
Sunday, March 1, 2009

Following these tips can trim your banking and loan expenses by $3,715.

Bye-Bye, Late Fees: Millions pay credit-card late fees of as much as $39 each month. Use an automatic debit to make payments and you'll never be late again. Annual savings: $234 (eliminating six late fees a year ).

Wipe Out Interest: The average household has $7,430 in credit-card debt. But let's assume you have just half that. Take advantage of a 12-month zero percent balance-transfer offer from Bank of America or Discover. Annual savings: $422 (on a rate of 13.6 percent).

Nix ATM Charges: Each time you use an out-of-network ATM, you pay an average of $3.43. Avoid charges by selecting a bank such as Citibank, with more than 23,000 fee-free ATMs. Annual savings: $178 (based on one fewer out-of-network ATM withdrawal per week).

Checking That's Hardly Free: Brick-and-mortar banks charge an average fee of $12 per month for checking accounts and require an average minimum balance of almost $3,500 to avoid it. If you use direct deposit or make five or more debit-card purchases each month, Chase offers a free account with no minimum balance required. Or bank online at Salem Five Bank, pay no monthly fees, and earn 2.75 percent. Annual savings: $144.

Use Cash-Back Cards: Tired of accruing airline miles that you can never redeem? Switch to a cash-back credit card and earn enough in a year to pay for a coast-to-coast ticket. If you spend $850 a month for 12 months using Blue Cash from American Express, you could see a $250 credit on your bill at the end of the period. Even charging $550 a month on basics such as groceries, gas and drugstore purchases can put money in your pocket. Annual savings: $250.

Sign Up for Free Alerts: The average bounced-check fee has increased 34 percent over the past 10 years and is now $29, according to If you never balance your checkbook, sign up for your bank's free alerts to warn you if your balance drops to the preset amount of your choice. Need a safety net? You can get overdraft protection. Just be sure you know how much you're paying for it. Annual savings: $174 (six fewer overdrafts per year).

Refinance a Mortgage: With the interest rate on a 30-year fixed-rate loan at less than 5.5 percent, now is a good time to refinance.

Slashing your rate from 6.75 percent to 5.25 percent on a 30-year loan will save you 17 percent on your monthly payment. On a $200,000 mortgage, that translates into a savings of almost $193 per month. Of course, for a refi to pay off, you must stay in the house long enough to recoup any closing costs, which typically amount to 2 percent to 4 percent of the loan. Annual savings: $2,313 (refinancing a $200,000 mortgage).

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