• by Thom Forbes  @tforbes, May 16, 2011

The headline atop Rachel Louise Ensign's story in the Wall Street Journal -- "Maybe We'll Charge an Extra Fee to Read This" -- is rather arch this Monday given the fact that the paper was one of the first to successfully implement an online pay wall. But it speaks to the heart of the matter, which is that despite what regulators do, every business is going to find a way to make its bucks. In this instance, we're talking banks and their fees.

"If you feel banks are nickel-and-diming you these days," Ensign writes, "you'd be right." More like five-dollaring and ten-dollaring (and more) you, truth be told.

And why have the friendly folks down at the neighborhood savings and loan stopped doling out amenities such as lollipops and free checking for life? "Banks are now restricted in some fees they can charge -- and stand to lose billions of dollars in revenue as a result -- so they're coming up with new fees for things that used to be free," Ensign reports.

There are ways around such annoyances as paying a monthly fee for letting the banks play around with the money in your checking account while it's not doing anything else, but it appears that you need a master's degree, at least, in the art of fine-print reading to discern what they are.

Other fees that have risen include withdrawing money from ATM machines that are the property of other institutions than the one you bank with -- that's up more than 18% since fall of 2008, according to Bankrate.com. And then there's what Ensign calls "The (Fill in the Blank) Fee." One citation: up until when she inquired about the practice, a Citibank branch in Illinois raked in 5% of the deposit on large amounts of coins -- say those nickels and dimes from your kid's piggy bank.

How did this all come to pass? Annamaria Andriotis explains in Smart Money: "After the financial sector imploded, Congress passed sweeping legislation designed to protect consumers from egregious bank charges." Which meant they had to find different egregious charges to make up for the lost shortfall, just like they said they would.

"When reform legislation was being discussed," Andriotis writes, "banks warned they would find ways to make up for lost revenue. And they have." The price of an interest-bearing checking account has gone up 21% in five years, she reports, there are fewer rewards for debit-card users, "and a recent report by the Center for Responsible Lending accused banks of aggressively pushing pricey overdraft protection programs on consumers."

"We've looked at the impact of the changing economic and regulatory environment we're in today and we've made changes as necessary," a spokeswoman for Wells Fargo tells Andriotis. And a Chase spokesman says that the bank can't afford to pay debit-card rewards any more given the revenue it will lose on the fee it charges retailers for every swipe of the card.

Sheryl Nance-Nash writes on DailyFinance.com that despite the Federal Reserve's new regulations to require customers' opt-in before they could be hit with overdraft charges, they "continue to be a costly pain in the neck for millions of Americans."

The Center for Responsible Lending, she reports, charges that the banks responded to the rules with "pro-overdraft marketing campaigns that inappropriately targeted their customers." And a study from The Pew Charitable Trusts -- "Hidden Risks: The Case for Safe and Transparent Checking Accounts" -- finds that "overdraft penalty fees are disproportionate to the size of the average overdraft amount." Penalties run into "tens of billions of dollars" annually, it says.

"It is exceedingly difficult for the average consumer to find the basic information needed to either select a checking account or to responsibly manage the one they currently have," according to Shelley A. Hearne, managing director of The Pew Health Group.

And guess who is "caught in the crosshairs" of the "battle about a plan to slash the fees retailers pay banks every time a shopper uses a debit card"? Just as it has "reached epic proportions," it's consumers, of course, report Sandra Block and Jayne O'Donnell in USA Today.

"A March poll sponsored by the Merchant Payments Coalition, a group representing retailers, found that 70% of likely voters favor a reduction in swipe fees, once the rule was explained to them," they report. "But a survey by Javelin Strategy & Research, a bank consulting firm, found that 60% of consumers don't expect prices to fall if swipe fees are reduced."

Look for rewards to decrease and annual fees to go up. But debit cards will continue to gain in popularity over credit cards, given consumers' newfound frugality.

"The thrift mentality has taken over," Robert Hammer, CEO of bank advisory firm R.K. Hammer, says. "Banks are going to have to figure out how to deal with it."

Reading these stories, one gets the feeling that they no doubt will, and one wonders what the feds are/were thinking in trying to put a yoke on them in the first place. But CardHub.com CEO Odysseas Papadimitriou assures Smart Money's Andriotis that consumers are, on the whole, "at a much, much better place now than they were." They've just got to be smart about where they put their money, and what accounts they put them in. And that, presumably, is where advice from personal-finance magazines enters the virtuous circle of the market economy.