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!

Q: Seems like the home page offers and my offers are the same. Is there really any level of personalization in these offers?

A: Currently, a small percent of our offers are unique and custom. If our UI team is doing their job properly, it will be seamless to the user. With that said, we are currently in discussions with several large name brands that will be providing custom Karma Offers based on your credit profile. Our continued goal is to provide content, offers, and services that create value for our members.

Q: How is the credit score calculated? I can see by the inquiry that you’re using TransUnion, but my score differs from the one that TU provides.

A: The credit score formula is a proprietary algorithm unique to each score developer. We currently use a score created by TransUnion, with the underlying credit report data also provided by TransUnion. In your case, while the data source is the same, we are likely using a different scoring model.

We understand that this has caused some confusion for some of our users. We are in the process of developing a solution.

To learn more about scoring models, click here.

Q: I have recently went back to school to get a better education and I want to clean up my credit and live like a normal person and hold my head up.Where do I start? My score is a whopping 450 and I am in so much debt it scares me ($20,000.00)

A: Consistency and diligence are the most important aspects of improving your score. First, make sure your debt is at the lowest possible rate. Try to get a debt consolidation loan with a fixed monthly payment schedule that you can pay and plan against. If you are in school, look for school loans that are backed by the government for lower rates. Some loans even defer payment until you finish.

If you have a difficult time securing a consolidation loan then look for alternative sources such as person to person lending sites like Prosper, Lending Club, or Zopa.

Lastly, be patient. A good credit history takes years to create but only days to destroy.

Q: Was unable to sign up. Checked info and all match EX info. Suggestions, or phone number to resolve?

A: A majority of our failed credit score retrievals stem from fraud alerts set on the credit bureau file. To protect consumers, we purposefully do not show these scores. We are actively working on a solution with the bureaus to provide an alternative authentication process. We understand this can be frustrating to consumers currently looking for a score. However, consumer privacy and protection is our first priority.

Q: From a security perspective, how are you protecting your users data? Is it stored in your databases or is it using some sort of hosted-security model (like PassPack)?

A: Security was our first consideration when building our system and infrastructure. Here’s an overview of some of our security practices:

1. All sensitive data is encrypted during transmission, in accordance with industry standard best practices.
2. All sensitive data stored in our databases is encrypted.
3. All machines are firewalled and the appropriate measures have been taken to separate machines with sensitive information, particularly databases, from the Internet.
4. We do not store full SSNs . In the unlikely event of a breach of both our systems and encryption, an attacker would only access incomplete user information.
5. We do not require you transmit your full SSN to us more than once (on your first credit pull).
6. We have gone to great trouble to secure all parts of the application from unauthorized access via common web exploit patterns.
7. We are required to pass security audits by the credit bureau.
8. All of our servers are housed in a secure facility that is monitored around the clock, 365 days per year

Credit Karma was created to empower consumers by demystifying the credit landscape and providing consumers a unique way to benefit from that knowledge. Our service is free to consumers. No credit card is required and no strings are attached.

Our services are sponsored by our partners and advertisers who help pay for the credit scores. With that said, Credit Karma adheres to a very strict privacy policy . We will never sell your personally identifiable information, send spam, or share your information without your explicit consent.

The purpose of this blog is to share trends we are seeing in the credit and credit related industries. We hope to facilitate intelligent discussions, answer common questions, and provide articles that inform and educate.

Just by scanning some of the existing blogs and discussion forums, we can see there is enthusiasm, confusion, and skepticism about both Credit Karma and credit scores. We would like to start a dialog with our users via this blog to address their concerns. Please post any questions or comments in the comments section and we will attempt to address as many user questions as possible.

Thank you for your early support of Credit Karma. We have some really innovative and useful tools in the product roadmap.