Bank Fees in 2012: Up, Up and Away!

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One solution: charge customers more fees, either by raising existing fees, charging for services that used to be free or offering new services at a cost.

"Big banks are raising fees, inventing new fees and making it harder to avoid fees", said Ed Mierzwinski, consumer program director at U.S. Public Interest Research Group, an organization that lobbies for consumer protection at the national level.

Mierzwinski, as well as several other experts, say 2012 will see banks attempt to place higher fees or new fees on retail consumers. Some possibilities include:

• Continuing hikes in the amount banks charge to let people use their ATMs with another bank's card. "ATM fees continue to march higher, year in, year out," says Greg McBride, senior financial analyst at Bankrate.com, another Web site set up to help consumers make banking decisions.
• Percentage-based fees for ATM withdrawals. Matjanec points to an example of an ATM that charges customers 3 percent on the total amount of cash withdrawn -- or $6 on a $200 withdrawal -- and notes such fee schemes could become more common.
• Increased minimum balance requirements instituted to avoid fees. McBride calls this the "backdoor way of putting a fee increase," since consumers who did not have to worry about paying a fee before will now be subject to one.
• Elimination of debit card rewards program, including through tweaking the value of points.
• Moving consumers from interest-bearing checking accounts towards non-interest bearing accounts, which McBride sees as a possibility in certain credit unions that offer such option.
• Higher fees for relatively less-common transactions currently free at most banks, such as receiving copies of cancelled checks as part of a statement or replacing lost debit cards.
• Fees for speaking to a person rather than manuevering through the prompts of an automated customer service system, what Mierzwinski describes as "a charge for calling to a human instead of a machine."
• A rise in overdraft protection fees, perhaps by instituting a system where the customer pays a monthly fee for a certain level of protection, rather than a per-item fee every time overdraft protection is triggered.
• Fees for relatively novel offerings, like the ability to deposit a check using a smartphone or being able to review certain transactions before they clear.
• Small fees, in the order of $1 to $2 a month, for specialized Web-based services, such as being able to instant message a service representative, or personalize what each user accessing a joint account sees. Matjanec, who believes this is the direction many new fees will take, says bank see these new services as "making a foundation for new fees."

"The Telecom Model"

While the experts all agreed new fees are on the way, they disagreed markedly as to the way new fees will affect customers.

Matjanec, for example, believes banks will work to place customers with different levels of engagement in different "buckets," working to "introduce a new form of banking where relationships really matter." McBride agrees, noting "the fee that one guy pay isn't necessarily the fee the other guy pays."

But their agreement does not extend to how exactly that will happen.

Matjanec believes banks are going to take "the mobile telephone bill experience -- the data plan model" where customers choose from a menu of services on a monthly basis.  Similarly, Mierzwinski says checking accounts are likely to become an "a la carte product: the same way you see in airlines where they charge you for checked bags, or having a better seat, or pretty much anything but riding on the wing."

McBride, on the other hand, says banks will avoid that model, since "people don't want to feel like they're on Spirit Airlines, that they have to pay every time they put a bag on an overhead bin, or to get a drink of water."