3 Ways to Avoid Rising Fees

by Minority Fortune

moneyblowingWho enjoys spending their money endlessly on pointless fees? Right, no one! On CNN Money, they feature an article targeting how to deal with increasing fees piled on by banks, credit cards companies, and mutual funds. Since the approval of the 2009 CARD Act, these companies are using their available loop holes to trap their customers. Minority Fortune thought these tips may be helpful if you find that you’ve been targeted by these companies.

1- Credit Cards
Why fees are up: President Obama just signed off on major reforms. Card issuers aren’t happy. They’re doing everything they can to make money off you before the regulations kick in next year.

What you’re getting socked with: Up to 3% extra for foreign goods you buy in dollars (such as a ticket on Air France). Balance-transfer fees are up too: Several issuers have raised them as high as 5%.

What you can do: Swap for a lower-fee card, such as the IberiaBank Visa Classic card, which charges 0% for the first six months and has no transfer fee. For more, look on CardRatings.com or LowCards.com.

2. Mortgages

Why fees are up: Banks are still nervous about lending, so they’re bolstering their coffers against potential defaults.

What you’re getting socked with: You’ll have to pay the 0.25% “adverse-market fee” that Fannie Mae and Freddie Mac have tacked onto every loan they insure. If you’re refinancing and have less then 40% equity or if your credit score is below 720, expect fees of up to 3% of the value of the loan.

What you can do: Boost your credit score by trimming credit card balances and paying your bills on time. For more specific suggestions, use the simulators at MyFico.com or CreditKarma.com.

3. Mutual funds

Why fees are up: Talk about rubbing salt in your wounds. As assets dwindled, fund firms had to hike fees to cover their costs.

What you’re getting socked with: Higher annual expense ratios. The one on American Funds Smallcap World, for example, went from 1.07% to 1.15%. Even low-fee champ Vanguard upped the cost of its U.S. Value Fund by 0.09 of a percentage point. You might also get hit with a $10 to $20 fee if your balance has slipped below the funds’ required minimum.

What you can do: Don’t love the fund? Ditch it. After all, if it’s in a taxable account, you can write off your losses. Then replace it with a similar fund that’s cheaper too.

*Image courtesy of Hiroshi Watanabe
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