New legislation limits the amounts that banks can charge for certain types of fees, so banks are adding new charges to make up for lost revenue. Some checking account customers are now paying monthly maintenance fees for the first time, and some card users are getting charged new bank fees for inactivity.
"Traditionally, banks looked to fees as a cost recovery system," says Michael Hermens, president of Finance Forward LLC, a financial consulting firm in Dallas. There are real costs associated with account maintenance, so banks charged their customers to recoup the cost of their services.
"The problem is when they report to government regulators -- the Federal Reserve, Comptroller of the Currency and FDIC, it is difficult to justify fees because the costs are indirect," Hermens says.
Institutions are using bank fees to incentivize consumers to utilize lower-cost products and to penalize them for using higher-cost products.For example, many banks have fees to take mortgage payments over the phone. Some banks have teller fees....