For Higher Rates And Lower Fees, Try Smaller Banks

Community banks, credit unions and online banks are luring refugees from the bigger banks by offering lower fees, better savings rates, and personal service that may remind you of George Bailey's building and loan. And in case that's not enough, they're offering freebies to sweeten the deal.

Big banks want your money, too, but they're turning customers off with higher fees and tighter lending -- not to mention stress tests and troubled assets. They continue to raise fees, even as the grab for business intensifies and consumers are more cost-conscious.

Bank of America recently raised the monthly maintenance fees on some of its checking accounts. Wachovia, now a Wells Fargo company, boosted its transfer fee to cover checking-account overdrafts. Charges for using credit cards overseas are also on the rise.

But community banks appeal to customers because they have close ties to residents and usually offer more personal assistance. They tend to have fewer -- and lower -- fees than the major banks. They generally offer lower rates on loans and higher yields on savings, too.

Credit unions focus on their members (and almost anyone can join one). According to a study by the Credit Union National Association, credit unions charge an average of $25 for overdrafts; banks charge an average of $30.

To find one, check out the Credit Union National Association's site. You may be eligible to join one where you work or live or because a family member belongs.

Online banks are another good option, particularly to avoid ATM fees. If you use a bricks-and-mortar bank's ATM, many online banks will reimburse you for fees. Go to Bankrate.com, which lists the latest interest rates and offers. Click on the "compare rates" tab at the bottom of the page to find banks with above-average yields.