The Fight Back Against Bank Fees
COLLINS: Fees are a big money makers for banks, but that doesn't mean you have to pad their bottom line. Personal finance editor Gerri Willis joining us now on how you can save money by fighting back against big fees. I love the sound of this, Gerri. You just call and tell them, I'm not paying?</s>GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, it's where you get your loans. You know, we've talk a lot about the perils of say payday loans. These are short-term cash loan security. Interest rates of 400 percent to 5,000 percent.</s>COLLINS: Oh.</s>WILLIS: Yes, right. Now there's a new payday-like loan that's being offered by some credit unions, and we really want you to know about this. According to the National Consumer Law Center, these payday loan alternatives offer effective interest rates. That's if you roll in the fees of 455 percent. Too much money. Keep in mind that by law, federally chartered credit unions can't charge you more than 18 percent on loan. So our advice here if you're really strapped for cash and need money immediately, negotiate a payment plan with your lender, stay away from these short-term loans that just keeps you in debt.</s>COLLINS: Yes, yes, yes. Well, you say there are fees for unemployment benefits too, right?</s>WILLIS: That's right. Instead of getting checks, paper checks for your unemployment benefits, now, prepaid cards are getting distributed in about 30 states, and fees on these cards for just accessing your money range from 40 cents to a high of $3 per transaction. Now, even some banking services that are normally free like checking your account over the phone or not using your card, inactivity, that's costing you money, too. If you have one of these cards, make sure you read the fine print. And you can skip this altogether by choosing the direct deposit unemployment pay option over the prepaid card and have your money just directly deposited into your regular bank account. Find out if this option is available to you. It's far better than taking the prepaid card.</s>COLLINS: Yes, sure. Sounds like it. What's being done about overdraft fees? Because some of these are just really exorbitant. It's kind of like blood from a turn up if you're trying to get money from people who are over drafting, right?</s>WILLIS: That's exactly right, Heidi. You know, overdraft fees, these are fees the bank charges if you don't have enough money in your account to cover a transaction and they pay that transaction. About 75 percent, 3/4 of U.S. banks automatically enroll people in these programs and then they charge you $35 to cover any overdraft. The fed is considering whether to crackdown on these things. It's triggered if you use a debit card forcing the banks to allow consumers to choose it, or to opt in or opt out of overdraft protection. And Representative Carolyn Maloney, she's on the case, too. She's introduced legislation that would require you to be warned before you overdraw your account. In the meantime, make sure you have access to your checking account online so you can keep tabs on this and you don't get caught overdrawing your account. You should also link your savings and checking accounts together so you have some money to cover any overdrafts. But if you are not on guard, right now you're paying $35 a hit.</s>COLLINS: Yes. Well, I wonder what are they going to do? Give you a quick phone call or an e-mail or something to warn you?</s>WILLIS: Well, Maloney -- yes, wants some kind of way...</s>COLLINS: Out of New York, right?</s>WILLIS: Maloney wants some way to warn people ahead of time. So that they know that you're over drafting. That's the problem. You know, you go ahead, spend the money, you may not be aware you're over drafting. You could easily build up hundreds of dollars in fees that would be avoidable, perhaps, if you just knew what the problem was.</s>COLLINS: OK. Very good. Gerri Willis, thank you.</s>WILLIS: My pleasure.</s>COLLINS: Turning children into walking bombs. We're inside Pakistan with a group of boys who say they were kidnapped and trained to kill.