Ripped Off!

Question of the week:I just found out the closing costs I paid when I refinanced my mortgage were much higher than average. I had no way of realizing this before it was too late-what should I do in the future to make sure I know what I'm getting into when I deal with banks, brokers, etc.? --AB in Colorado Springs

Dear AB,

FROM ARMCHAIR MILLIONAIRE.COM Start Your Financial Future Today Name: Email:

As financial services have proliferated into every aspect of our lives, so too have the chances for us to pay too much for, or to get talked into buying financial services that we don't really need at all. When it comes to getting hit with unexpected financial services costs, you have plenty of company in your frustration. When we asked Armchair Millionaire community members about the surprise charges that get their goat, we got an earful. Here are a few examples:

ATM fees. "When I can't get to my bank and have to use another ATM machine, I have to pay that machine, plus pay my bank for the privilege of getting my own money." --Theresa

Mutual fund loads. "Fund loads don't improve fund performance, and have little bearing upon a fund manager's results." --Vito Z.

Biweekly mortgage payment programs. "Paying a bunch of money to have your mortgage payments put on a biweekly plan so you can pay it off sooner is crazy. Just make an extra payment yourself every year." --Kimmy

Some of the fees you pay are compensation for honest work by financial services providers, but others are hidden fees that simply pad their bottom line. My checklist will help you separate the reasonable from the outrageous.

The Armchair Millionaire Guide to Not Getting Fleeced

• Look closely at underlying costs. You will always pay some kind of fee or commission for every single financial service or product you ever buy, but often it will not be clearly spelled out for you. No load mutual funds can still carry significant costs, for example. Just because you can't easily see it doesn't mean it isn't there, so don't hesitate to ask about the fees that you will be paying.

• Take your time. People spend more time deciding which video to rent than they do hunting for the best deals on financing or insurance, even though careful shopping could save them thousands of dollars. Shop around and make sure you understand what you're getting in to. If you're feeling pressured, or if you're not getting the answers you need, delay your decision to another day.

• If you don't need it, don't buy it. More does not equal better. Children--and others without dependents or mortgages--probably don't need life insurance, plain and simple, no matter what your insurance salesman tells you. Don't buy credit card insurance when you pay your balance off every month. Likewise, don't buy insurance that will pay off your mortgage if you die when you already have life insurance.

• Understand how your financial services providers are paid. How much will your insurance salesperson make from selling life insurance to you? What about your broker? Are they paid a commission every time they make a change in your portfolio, or do you pay them a percentage of the assets they manage? Paying for advice is fair. Overpaying for advice isn't. Make sure you are comfortable with the price you're paying and what you are getting in return.

• Negotiate fees. Everything from "dealer prep charges" when you buy a car to "mortgage broker fees" when you finance a house may be negotiable. Understand them and ask for them to be lowered or removed. If the fees are not satisfactory to you, be prepared to take your business elsewhere.

THE BOTTOM LINE: Financial services pitfalls are so commonplace now that there is no way to even know about all of them. Your best route is to go slow with any decision, be skeptical of all fees and insist on completely understanding any product or service before you buy.