5 big bills you can cut fast

Banking and credit

Individuals pay banks, brokerages, credit card companies and other vendors a slew of extra fees, charges, interest and penalties.

One recent study by the Government Accountability Office and the Federal Deposit Insurance Corp., or FDIC, found that Americans spend $36 billion annually on bank fees alone. That's up from $24.4 billion in 2000.

Meanwhile, Consumer Reports estimates Americans spend $216 billion a year on fees for personal financial services, from banking to mortgages.

Don't take these fees lying down. For example, if your lender increases your credit card rate, call to have it lowered. You've got a 50-50 chance of getting resolution, according to a consumer study by U.S. Public Interest Research Groups, or U.S. PIRG.

"Credit card companies will routinely raise your rates to see if they can get away with it, so you have to be vigilant," says Ed Mierzwinski, the consumer-program director at U.S. PIRG.

When it comes to some fees, you may be your own worst enemy. For example, if you go over your credit limit these days, you'll likely still be allowed to spend. The catch: You'll owe an over-limit fee, which typically runs $39.

"Keep a healthy cushion (between) what you're allowed to spend and what you (actually) spend," says Jim Campen, the executive director of Americans for Fairness in Lending.

Other tips for keeping your banking and borrowing costs low:

• Comparison-shop. Switch banks, credit cards, even brokerage accounts that drain your finances by switching to competitors offering better deals. It's easy to find the best offers using MSN Money's rate comparison page.

• Read the fine print. Pay attention to requirements that could wind up costing a bundle. A free checking account may sound appealing, but is there a minimum-balance requirement? If you can't meet it, you may wind up paying fees that make that free deal pricier than you thought.

• Watch out for ATMs. Whenever possible, pull cash out of your ATM in larger amounts to reduce repeat visits to the machine. According to Bankrate's 2007 survey of ATM fees, the average ATM fee for non-account holders was $1.78. However, some banks charge more. Tack on the foreign-use penalty your own bank levies when you use a competitor's ATM, and you could well be spending nearly $5, or 25% of that $20 you grabbed on the go.

• Chuck the debit card. Putting away the debit card lowers the odds of triggering overdraft protection fees. They kick in when you use a debit card and make purchases that exceed your account balance. Overdraft fees now average $34 per transaction, or $17.5 billion annually in the U.S., according to the Center for Responsible Lending.

• Pay on time, and beware of default rates. Miss a payment deadline? Chances are you'll wind up paying hefty fines. In fact, if you're late on one bill with any creditor, your other creditors can legally use that tardy track record to boost the interest rates they charge you. When you get bills, mark their due dates on a calendar or set up automatic payments so you don't miss deadlines.

• Scrutinize statements. More than two-thirds of lenders, 77%, say they can change rates "at any time, for any reason," according to Consumer Action. So even if you pay on time each month and think you're an ideal customer, study your statement and look at the fees, your interest and other unexpected changes that could cost a bundle.

For more, see "10 things your bank won't tell you."

Taxes

If you're like most people, you probably don't pay much attention to taxes until April 15 rolls around. But taxes affect us daily, whether we're working, shopping or saving for important milestones such as retirement.

Here are ways to reduce your taxes:

• Snag the first-time-homebuyer credit. Individuals who buy a dwelling between now and July 1, 2009, and who haven't owned a primary residence for the previous three years can claim a new credit that's worth 10% of a dwelling's purchase price, or up to $7,500. The break phases out for joint tax filers with incomes of $150,000 (or $75,000 for individuals). It's important to note that these credits are structured more like interest-free loans than true tax breaks.

• Claim the 2008 homeowners tax break. Individuals who own their homes outright or who've had mortgages so long they're paying mostly principal rather than interest may no longer qualify to itemize on their returns. Now there's some temporary relief for them. This year, they can take $500 (or $1,000 for joint filers) of state and local property taxes as an addition to their standard deduction on their 2008 federal income tax return.

• Grab breaks for low-income earners. One out of four eligible taxpayers fails to claim the earned-income tax credit, or EITC, worth as much as $4,716 a year depending on someone's earnings, marriage status and whether he or she has children or other dependents. See "A tax break that's worth the hassle." If you qualified for but didn't claim the EITC, file an amended tax return for any previous year back to 2005.

See also "10 big deductions too many people miss."

Continued: Cut your auto insurance

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