As I said in my introductory post, the trick to getting the most from your bank or credit union is to take advantage of the financial system. But sometimes it feels like it’s the financial system that’s taking advantage of us; mainly in the way of ever-increasing fees.

You’ve got your fees for overdraft protection, fees for using an ATM that doesn’t have your bank’s name on it, fees for going under your minimum balance or over your allotted number of withdrawals each month… the list is seemingly endless. And especially in this time of financial woe, when people are defaulting on loans left and right, you can be sure most banks are looking to squeeze whatever they can out of you.

So here are a few simple ways to avoid paying fees:

1. First off, you need to grab a “fee disclosure” from your bank or CU, which they should have at any branch. This will list out absolutely every fee they can stick you with. Once you know what to watch out for you will be much better equipped to sidestep those fees. This will also help you pick the right checking, savings, or credit card account based on your spending and savings habits; no need to get hit with low balance fees or to choose an account that doesn’t give you enough withdrawals each month.
2. Join up with a financial institution that has ATMs near your house or office and don’t be afraid to take your money elsewhere if you move. If you don’t use your own bank’s ATMs, fees are typically around $2 at the ATM and then your bank will stick you with another charge of around $2. That’s $4 to take your own money out! Obviously the major banks have a good amount of machines in bigger cities, but ATMs are one place you might not have seen the little credit unions coming—most CUs are part of a network of ATMs that will not charge you a fee. The CU CO-OP Network, for example, gives you access to over 25,000 ATMs in the US, including other credit union’s ATMs and those you’ll find at all 7-Eleven and Costco stores. Either way, if you do have to use a machine that charges you a fee, take out a little more cash than you might need at that moment, because paying $4 for $100 rather than for $40 will at least keep you from having to go back to that ATM as much in the future. Getting cash back at the supermarket is always an option too.
3. Avoid overdrafting your account or, worse, getting slammed by a non-sufficient funds fee (NSF). This one just takes paying attention on your part (or not spending money you don’t have, but no one needs to tell you that). A great new feature of most banks’ online banking system is that you can sign up for account alerts, which will be delivered to you via e-mail or even text message. You can set the alerts up to warn you when you balance gets to a certain minimum level, saving yourself a lot of hassle and a lot of money in fees.
4. Get to know the people at your branch. Seriously. Because if you do get hit with a big fee, like an overdraft fee or a late payment on a credit card, often if you talk to a real, live person (and you don’t have a history of account abuse) you’ll be able to get your fee waived or at least reduced. In this age of doing everything online there is still something to be said for the personal touch.

Trust me, this fee trend in banking isn’t going anywhere and it’s not even exclusive to the financial industry. It’s happening among a lot of service-based organizations that have hit hard times. Just look at the airline industry. Now you have to pay a fee to have a decent snack!

At Credit Karma, we want to give our users access, information, and leverage. We read everyday about the importance of credit but I don’t think we do a very good job quantifying it. Last Friday, I called up a friend at E-LOAN and asked about the best rates for a 650 credit score versus a 600 credit score mortgage rate. For the 650 borrower, the best rate was 6.75% with no points. For the 600 borrower, the best rate was 8.75% with 3 points.

Assuming a $250,000 mortgage and using our mortgage calculator, you will see that the 600 borrower will pay over  $93,000 more over the life of the loan in interest and will have to pay an additional $7,500 in closing costs. That means, a mere 50 point difference in credit score can cost upwards of $100,000. The difference is obviously higher if you have a larger mortgage assuming you can get the loan. To me, this makes credit the most important number in your financial health more than your SSN, credit card number, or even the balance in your bank account.

With this in mind, I suggest that you keep an eye on your credit score. You know better than anyone when you will have a major purchase. So when you plan your next big purchase (mortgage, car, etc.) , be diligent about knowing your score. Check it once a month and make sure you know the factors that make it go up and down. Remember that good credit takes years to build only only a few missed payments to destroy. Given the costs associated with credit, it can be the most expensive mistake of your life.

While most of the major banks are providing .25%-3.25% interest, there are many small community banks and credit unions that are willing to provide 4%-6% interest on your checking and saving deposits. I was a bit skeptical when I first saw the rates since it seemed too good to be true and way out of the market averages.

However upon further investigation, it appears these programs are legitimate. These savings and checking programs hope to build a more loyal and profitable customer.  The small banks and credit unions that participate hope to compete with the big banks by providing a better rate. In exchange, these programs require you to actively use their product. Some requirements are using their check card, registering for direct deposit, and receiving electronic statements.

Credit Karma has long had some of these offers available and judging by the comments and voting users really like concept. The big negatives from the comments has been the fact that the small credit unions are not accessible and very regional. I recently met the CEO of a new site, CheckingFinder, at Finovate. Their new service allows users to find these great programs based on your zip code. They recently launched the site and I’d like our readers to see if works for them.

Because of the requirements, its not the perfect product but for many looking to maximize their return this is definitely a good way. Give it a try and please share your experience.

Every time the Fed lowers short term interest rates there is a flood of questions asking: “Is it a good time to buy or refinance?”. For the majority of people who are looking at 30 fixed rate year loans, the answer is “No.”

Unlike credit cards, auto loans, and home equity lines of credit, Fed rate changes have little bearing on long terms rates which are more correlated to inflation and other macro level events.

(Note: Because of refinancing, the average life of a 30 year fixed rate mortgage is closer to 10 years. Therefore a 10 year treasury is often used to index a 30 year fixed rate mortgage. The fixed rate mortgage will always be higher than the 10 year treasury because there is inherently more risk in a mortgage than a US government backed security.)

Below is a correlation of the fed funds rates, the 10 year treasury, and the average 30 year fixed mortgage rate. Recently, there is a divergence between the 10 year treasury and the 30 year mortgage rates. While the 10 year treasury has gone down, mortgage rates have stayed flat or increased.  This is due to the recent problems in the sub-prime mortgage industry.

Hope this helps clarify a few things. You can check the latest mortgage rates on Credit Karma.