Crying all the way to the bank

It may seem like only a nickel here and dime there, but American bank customers are paying billions in fees for simple checking accounts, and the charges keep growing.

That's the conclusion of an April 18 report by Bankrate.com. Bankrate found that 98 percent of banks that own ATMs now charge those without accounts at the bank for access, up from 89 percent two years ago. The amount they charge also grew from $1.32 per use two years ago to $1.60 now, and Bankrate estimates that financial institutions will collect about $4.2 billion in such fees this year.

Banks are also requiring higher balances to avoid fees on interest-bearing checking accounts and are charging more for customers who fail to maintain those high balances. Customers now must keep an average balance of $2,465 in their interest checking accounts or face an average monthly service fee of $10.85. For this, a customer can expect an average yield of 0.32 percent.

The biggest charges are leveled against those who bounce checks. The average fee for an overdraft is now $27.04-for first-time bouncers. Many banks are starting to charge repeat offenders more.

The good news is that these fees remain avoidable. Bankrate suggests, for instance, that if using your bank's ATM isn't always possible, a customer can avoid fees by getting cash back from a debit card transaction. Customers with interest checking accounts, meanwhile, may want to look into whether they would be better off switching to a no-fee, non-interest checking account, keeping a low balance there, and putting the extra money into a higher-interest money market or savings account. The money will still be liquid, put it will earn a much higher return.

For those concerned about bouncing checks, Bankrate suggests signing up for overdraft protection and keeping better records, especially for any automatic withdrawals.

Balance Sheet

In what may be bad news for the housing market, mortgage rates continued to creep upward last month. Freddie Mac reported on April 20 that the average interest rate for a 30-year fixed-rate mortgage rose to 6.53 percent, the highest rate since July 2002. Rates also increased for 15-year fixed-rate mortgages and for adjustable-rate mortgages. A year ago, interest rates on a 30-year mortgage averaged 5.8 percent.

Even with gasoline prices at $3 per gallon and the housing market cooling, consumers don't appear worried. The Conference Board reported last week that its index of consumer confidence rose to the highest level in four years during April. With the exception of February, the index has been on an upswing since November. Economists are watching closely the signals that the Federal Reserve Board gives at its May 10 meeting: Continued interest rate hikes could dampen consumer moods.

Americans are planning to show some discipline with their tax refunds this year, at least according to one survey. Taxsoftware.com found that more than half of those surveyed would use some of their tax refund for investing or paying down debt. Only 24 percent said they would use the money for a big-ticket purchase like a car or furniture, and 16 percent said they would use it for a vacation. Twenty percent said they would give some of their refund to charity.