You know about airline change fees, baggage fees, premium seat fees and food fees. But how about a "you-get-to-sit-with-your-child" fee?

John Parish is giving his 5-year-old daughter the birthday present every child dreams of: a trip to Disney World. But he's afraid American Airlines has booked a travel nightmare for his family and other fliers. There's only one way out of the nightmare, he was told: Pay an additional fee, months after booking the trip.

Parish bought his tickets months ago, in March, and scored three seats together on a flight from Dallas to Orlando, Fla., for his wife, Amanda, and daughter, Megan. Then, in July, bad news arrived. American Airlines had changed the flight schedule for the return trip, and it had changed the plane, too. It was a bigger plane, but no longer could the family sit together. In fact, Megan had been moved onto the other side of the plane, rows away.

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Parish, himself a frequent business traveler and American customer, thought that it was a simple mistake and that a quick phone call could correct the problem. After all, who wants a 5-year-old separated from her parents on a three-hour flight? Parish was only half-right.

There were three seats together, an American customer service agent told him. But the only way he could get them was to pay $60 in extra fees for what was now considered premium seating. Parish was outraged. But a discussion with a supervisor got him nowhere.

"What bothers me about this situation is that they are trying to charge me for something I already had paid for because they changed flight schedules," he said. "I know it's only $60, but this is a little extreme. ... It's not fair when it is literally their fault because they are changing their schedule, but they put the onus of the cost and change on the consumer."

Amanda Parish said the family had booked the trip a full seven months in advance specifically to ensure that they'd all be able to sit together.

"As a mother, I couldn't imagine letting my child fly next to a stranger," she said. "It really does feel like a bait-and-switch. At the very minimum, you should get what you paid for. ... We already paid for seats together. The point of going on vacation is to actually be together."

John Parish sent a letter to customer service asking for a response and an explanation; he got neither. Then he contacted NBC News.

American Airlines spokeswoman Mary Frances Fagan told NBC that she was "sorry that the Parish family encountered difficulties" but that a change in aircraft type can alter seat assignments.

"When aircraft changes occur, the computer tries to re-accommodate our passengers in the same seats — or close by — to those they held before the swap," she said. "In this case, one of the seats needed to keep all three members of the family together was not automatically available."

She said families that are separated in situations like this should talk to gate agents and flight attendants, who "work closely with passengers who want — or need — to fit together."

Consumer advocate and travel expert Chris Elliot says complaints about children being separated from parents are increasingly common as airlines have gotten better about flying near-full aircraft and as they increasingly turn to premium tiers and other fees for seating arrangements. Usually, however, flight attendants work with passengers to make sure kids aren't flying alone.

"The last thing anyone wants is a child separated from their parent for a nine-hour flight," said Elliot, the parent of three small children. "No one wants to be seated next to someone else's 2-year-old."

Generally, a combination of airline employee cajoling and passenger volunteers straightens out the mess, he said.

But the crush of new airline fees — including fees to guarantee seat assignments — has created an added layer of frustration to the parent-child separation drama.

"There's a perception that airlines are holding parents hostage. They're saying: 'If you don't pay the fee, we can't guarantee you'll be seated with your kids. So shell out the extra $60," Elliot said.

Elliot recommends that parents not pay the fee and demand seats together when they arrive at the gate. Passengers have to put up a fight on such issues, he said.

"In essence, the airlines are playing a game of chicken with passengers, and I would not blink first," he said. "I wouldn't pay the $60. I would show up at the airport early and say, 'Look, we've got a family of three, and we want to sit together,' and see what happens." Nearly always, parents get their way, he said.

In July, Citizens for Responsibility and Ethics in Washington became the latest group to ask federal regulators to step in and forbid airlines from separating children and parents on planes. Rep. Jerrold Nadler (D-N.Y.), also in July, introduced the “Families Flying Together Act of 2012.” Elliot thinks the sentiment is good, but he warns that the issue isn't as simple as it sounds.

"I'm concerned when the government starts to regulate things like this and thus have to define what a family is," he said. "What about couples who aren't married, for example? Would they have right to demand to sit together as families?"

The solution to the problem of ever-more-creative fees, Elliot said, is a more comprehensive determination of what consumers get for their ticket purchase.

"The Department of Transportation is going to have to step in and define what an airline ticket is and what it is not," he said. "Soon, they may charge for the ability to use a restroom. Is the emergency oxygen not included in the price? It's time to say enough is enough."

Parish said that, if he had to, he planned to trade seats with his daughter so she could fly next to Mom during the flight home. It's an obvious, if not optimal, solution.

"That will be all right, but it's the principle that bothers us," he said. "I enjoy sitting next to my wife when I fly. We're on vacation. There is value to sitting next to your spouse or significant other."

Despite the seat shenanigans, his daughter is still excited about the upcoming trip.

"She's been going nuts about it. Her grandparents just threw her a Disney-themed birthday party," Parish said.

Hopefully, they'll enjoy the trip home, too. After NBC's call to American Airlines, Fagan said that she had called a ticketing expert and had placed the three together again, free of charge.

Asked what advice she’d give to other passengers in the Parishes' situation, Fagan said this:

“I'd tell people who want — or need — to sit together to talk with the agents at the counter when they get to the airport and when they get to the gate.  As you know, some seats — including bulkhead and exit row seats — aren't given out until prior to departure and agents have some flexibility to make seating changes to accommodate passenger desires. Flight attendants also are helpful in seating people together if they are aware that families need to sit together."

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Finally, an honest CEO.

Ryanair head Michael O'Leary called his customers "idiots" this week. The chief of the deep-discount, “gotcha”-dependent airline might be the first to say it, but he's hardly the first to think it.

O'Leary was speaking specifically about fliers who fail to print their boarding passes before they arrive at the airport, and are forced to pay Ryanair's 60-euro fee. The issue came to a head after a mom paid about $380 so her family could get the paperwork to fly home from Spain to Britain. She aired her concerns on Facebook and got hundreds of thousands of "likes." O'Leary responded to the controversy as many CEOs would after being administered a truth serum.

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"We think Mrs. McLeod should pay 60 euros for being so stupid," he reportedly told The Telegraph before piling on the sarcasm. "She wasn't able to print her boarding card because, as you know, there are no Internet cafes in Alicante, no hotels where they could print them out for you, and you couldn't get to a fax machine so some friend at home can print them and fax them to you."

Even with a day or so to reflect, O'Leary only slightly changed his tune, arguing in the Irish Independent that his comments weren't aimed at the mom, specifically, but at his customers generally.

"I was not calling her stupid, but all those passengers are stupid who think we will change our policies or our fees," he said.

Ryanair occupies an important post in the gotcha world, having invented a-la-carte (i.e., sneaky) airline prices through bag fees, exit row seat fees, and has even threatened to impose potty fees. O'Leary is a trend-setter. Perhaps he'll start a trend for greater honesty, too.

'Stupidity fee'
He does have his defenders. While most of the Internet reacted in horror at the idea of a family paying $380 for 5 slips of paper valued at 5 cents, a certain set of consumers believes quite firmly in the concept of a "stupidity fee."

"I think it's about time an executive comes out and defends his policies," wrote one on my Facebook page. "It was in black & white, I don't know why the person was complaining."

In other words, companies can do whatever they wish, as long as it's disclosed. That's absurd, of course. In a famous April Fool's Day joke two years ago (and oft repeated), British firm GameStation got 7,500 members to agree to fine-print terms of service that included the phrase, "You agree to grant us a non-transferable option to claim, for now and forever more, your immortal soul."

Still, many people believe in the Tricks and Traps economy, which works like this: Discount retailers slash prices -- even below costs -- and coupon-clipping, rules-following, rebate-form expert consumers benefit. How is this possible? These bargain hunters and their $5 flights are subsidized by another set of consumers who screw up often and must overpay through tack-on fees and penalties. For years, the credit card market worked this way. Some consumers got thousands of frequent-flier miles, leading to free trips, while others paid their bills late and subsidized these perks through late fees. 

In a landmark economics paper on this issue, two professors dubbed these winners and losers "sophisticates" and "myopes." Smart consumers --  the sophisticates -- should thank their lucky stars every day that clumsy myopes exist; otherwise, there would be no $5 flights from London to Dublin.

'Gotcha economy'
I hope you can see where this ends badly. When all companies' profits come from fees, they only survive by getting very good at handing out such punishments. They are incented not to provide good products, services or even prices -- only to be better and better at sneaky fees. This is something I call the "Gotcha economy." It is very far from a free market economy, which requires price transparency and rewards innovation. The Gotcha Economy rewards cheating.

It also rewards absurdity, which is how we end up with $380 fees for boarding passes. Another inevitable element of the Gotcha economy is that the punishments don't fit the crimes. Sure, it's fine to charge something for boarding passes (well, not in Spain, where a judge has ruled that it's the airline's responsibility to issue them). But the charge should bear some resemblance to the business cost of creating them. Again, a customer racing to arrive at the airport is not in a free market situation -- he or she can no longer bargain over boarding pass printing costs. This is what is sometimes called the "captive consumer" problem.

But take basic economics out of this situation, and there is a much larger problem that needs addressing. The entire concept of a stupidity fee is bogus; even Thomas Jefferson would agree with that.

If someone dropped $50 on the street, would it be OK to keep it? They were stupid for dropping it, weren't they? If you give a clerk a $20 but think it's a $10 when buying milk, is it OK for the store to keep the extra $10 because you were stupid?

No. When someone makes a mistake, they don't automatically surrender their right to fairness and justice under the law.

Recently, I was on a United Airlines flight when the pilot tried to forcefully close the cabin door, and the emergency water slide accidentally deployed. We were delayed for four hours. Think I was able to charge United a $150 change fee? What would have happened to me if I was four hours late to the airport? Stupidity taxes aren't fair because they are always one-sided. Only large corporations in dominant market positions can offer such take-it-or-leave-it terms and conditions. Even if you have no sympathy for a mom trying to get her kids to the airport, it's hard to deny that there's nothing free market about one-sided deals like that.

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Being jammed into a plane for 10 hours can certainly feel like being stuck in a foreign country. But that's not the reason Michael Rosen's U.S. dollars were rejected on a recent flight from Hawaii to New York.  As many travelers know, dollars — the physical kind — are useless once you board an airplane in most cases. You'll need plastic to buy a headset, a drink or a snack. Rosen, a New Jersey lawyer, thinks that's discrimination, so he's filed a lawsuit aimed at forcing airlines to treat greenbacks, and consumers who carry them, with more respect.

A New Jersey state judge will hear arguments Friday to decide whether the case has any merit. Rosen is likely to get support from consumers who seem lodged in an endless battle with the airline industry, but he faces an uphill battle in court.

The case began with a situation that captures a typical traveler's nightmare: stuck on a 10-hour flight with no form of distraction and no way to buy a drink or a snack. Rosen's attorney, Nathan Kittner, said Rosen few from New York to Hawaii on Continental Airlines last year and purchased a headset with plastic. He was told the headset would work on all future Continental flights. So when he boarded his return flight, he checked his credit cards in his luggage and took the headset with him. He got bad news as soon as he sat in his chair.

"It wasn't compatible with that airplane," Kittner said. "Now he's stuck for 10 hours." Rosen tried to pay $3 in cash to get a new headset, but the flight attendant wouldn't budge. No cash.

"This is not a small thing," Kittner said. "It was a very long flight."

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Most airlines went to cash-free cabins two years ago. Kittner thinks it's just another example of the industry forcing consumers to suffer through poor service.

"They feel like the airline deregulation act gives them enough authority to make their own rules," he said. "It doesn't seem they should be allowed to tell a passenger, 'Sorry, we can't take cash.' "

There are practical reasons airlines don't want to handle coins and bills at 30,000 feet. Flight attendants hate making change, and cash accounting is a hassle.

"But that shouldn’t be the consumers’ problem; that's their problem," Kittner said. "We hope to send a message to the airlines."

Rosen's case includes several claims — Kittner thinks Continental broke a contract with his client when the initial headset failed to work on the second flight, for example. The lawsuit also alleges false advertising and violations of the New Jersey Consumer Fraud Act.

On Friday, an Essex County judge will hear arguments on Continental’s motion to dismiss the case. Continental didn't immediately respond to a request for comment.

But the case raises important larger issues. Should consumers who don't have credit cards be barred from in-flight purchases? Some don't hold plastic for philosophical reasons; others may have poor credit and have been denied credit cards.

The airlines are engaging in "unlawful discrimination against individuals who do not physically possess a debit or credit card," the lawsuit claims, according to North Jersey News.

Consumers who use cash already face some tough treatment.  Paying in cash can cause added fees to kick in (see "Paying cash? That'll cost extra"). As firms experiment with blossoming new alternative payment mechanisms, such as cell phone payment, the potential for even more discriminatory policies will only increase. Starbucks, for example, now employs a smartphone payment system that serves as a digital gift card for iPhone and Android users. What if Starbucks began refusing all other payment mechanisms? What if other stores began requiring payment through Google's Android phone? That's farcical, of course, because market forces wouldn’t allow it; consumers would just spend their money at the nearest competitor's coffee shop. Few businesses can afford to turn down money.

But this competitive element makes the airline situation unique, Kittner argued. Consumers who don't like Continental's cashless cabins can't exactly get off the plane and spend their dollars at a competitor.

"You are pretty much a captive audience on the plane," he said.

The basic argument against cashless cabins is one you've probably already heard: that "U.S. coins and currency are legal tender for all debts, public charges, taxes, and dues." The language comes from the Coinage Act of 1965, but it has roots that reach back much further in dollar history.

The clause seems to indicate that someone owed a debt must accept greenbacks as payment. The Treasury Department, however, says otherwise — and with a clarity rarely found in U.S. regulations.

"There is ... no federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services," Treasury says on its website. "Private businesses are free to develop their own policies on whether or not to accept cash unless there is a state law which says otherwise.”

There are plenty of situations in which private businesses — and even government entities — dictate the way consumers can pay. Businesses can refuse to accept bills that are larger than $20, for example. Buses can accept only change for automatic fare collection machines. Plenty of parking garages or rental facilities require credit card payment.

Of course, the Treasury's clear-cut policy may not prevent a New Jersey state judge from finding a violation of the state's consumer protection law — or at least entertaining the larger case — and any kind of victory for Rosen may force airlines to reconsider their policies. He’s considering filing a class-action lawsuit over the cash-in-cabin policies.

At a minimum, the legal battle might inspire airlines to give flight attendants a little more flexibility when dealing with petty cash issues.

"All they had to do was be a mensch about it — say, 'We see you already bought a headset. Here's another one.' And this all could have been avoided," Kittner said.

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Comments begin below. As a reminder, insults and name calling are not welcome and will be removed. Adults can make a point without using words like "idiot."

You didn't think banks would forgo billions of dollars in overdraft fee revenue without a fight, did you?

As an Aug. 15 congressionally imposed deadline approaches to stop collecting fees for most debit card-related overdrafts, banks are blanketing account holders with pitches designed to entice them back into the costly programs. Consumers are seeing pop-up ads when they log in to their online banking accounts and getting paper notices in the mail. Some are even getting pitched at bank branches or ATMs.

The enticements hawk rebranded overdraft coverage with varied names -- "courtesy pay," "Buffer Zone," "debit card advance," or simply "debit card overdraft coverage." But most of the pitches evoke the same logic: "If you want your account to continue to work as it does today, you will need to let us know," as one Chase ad says.

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Banks currently often allow consumers to spend money they don't have in their checking accounts through a swipe of their debit card in a store or through an ATM withdrawal. Then they charge consumers about $35 for each transaction that exceeds their account balance.  New Federal Reserve will require banks to decline those transactions as of Aug. 15 unless consumers have "opted-in" for overdraft coverage.

The new rules do not apply to paper checks or other forms of electronic payments.

Fearing a sharp loss in revenue, banks are making a hard sell to consumers to protect as much of that income as possible.

"NO FEE to keep Courtesy Pay Overdraft Protection coverage on your account. NO FEE if you never use it," brags a solicitation from the Arizona State Credit Union.

Some banks are even taking the opportunity to create new products, such as Citizens Bank's "BufferZone." According to a description of a bank brochure provided to msnbc.com by Jean Ann Fox of the Consumer Federation of America, consumers can pay $4.99 per month to buy a $30 "buffer" on their checking accounts.

"That means overdrafts will be paid and the overdraft fees waived as long as the overdrawn balance does not exceed the $30 buffer," the brochure says. "Keep small misses small.  Sometimes it happens:  your account is overdrawn by a couple of dollars, or even just a few cents.  With BufferZone you can rest easy knowing that your small misses will stay small."

If you doubt the importance of the change, a visit to banking consultant Acton Marketing's Web site will probably change your mind.  The site, which hosts a countdown clock that is ticking down the seconds to Aug. 15, brags that its marketing materials will help persuade "stubborn" consumers to opt-in.

Various estimates suggest that banks stand to lose between $10 billion and $15 billion in annual overdraft revenue from the change. Chase alone says it will lose $700 million in fee-based revenue this year.

As banks scramble to sign up as many consumers as possible, consumer advocates are crying foul. They charge that the banks' ads are misleading and that many are failing to clearly tell consumers they have far less expensive options for  debit card overdrafts.

"The choice is between paying nothing and paying what they are charging," Fox said. "But we are starting to hear from people being asked (to sign up for overdraft coverage) over and over and over, every time they log in."

'If you don't do anything you won't pay anything'
Lauren Bowne, a staff attorney at Consumers Union, says the fact that any consumers have opted in to bank overdraft programs suggests the ads are misleading.

"If you don't do anything you won't pay anything. That's what all banks fail to say," she said.  "Who knows what people are being told and why they are opting in."

It's hard to conjure up a scenario where overdraft coverage is a sensible way to cover a short-term cash shortfall, and the Consumer Federation of America recommends that account holders simply ditch the bank pitches.  Still, there are some indications that marketing materials are working.

A survey by research firm The Nielsen Co. released in June found that 26 percent of consumers intended to opt in, and another 39 percent were undecided. An anonymous executive quoted in the American Banker last month said that 60 percent of consumers opt in when told their cash withdrawal requests will otherwise be denied at an ATM. And a reader who told Consumerist.com that he was a bank employee, claimed last month that 19 out of 20 account holders consent to opt in when pitched directly by a bank teller.

"All you have to do to get an almost definite yes is explain that opting in will keep their account exactly the way it is now. People are scared of change so they'll opt in to avoid change," he wrote.

'Do you want to pay 18 percent, or 120 percent, or 900 percent?'
The problem, Fox says, is that consumers aren't getting enough information to make an informed choice about the overdraft coverage. For years, consumer groups have argued that automatic overdraft coverage is a short-term loan, and should be covered by the Truth in Lending Act. If it were, many overdraft fees would be computed at 900 percent annual interest or more, and that rate would be included in all marketing materials.  By that measure, other sources of short-term funding -- even many credit card cash advances -- would be cheaper. In fact, most consumers would be better off using a different product already offered by their bank.

"Banks need to spell this out in a clear format, " Fox said. "We have recommended that (the Fed) require banks to present the information in clear tabular format so, consumers see what all their options are and what they cost. When they say, 'Let us continue to cover your overdrafts, they're not giving you the cost information.  It should say, do you want to pay 18 percent, or 120 percent, or 900 percent ?'"

A collection of Consumer groups took on Chase earlier this year when it sent out mailers that they said were intentionally confusing and failed to mention the $34 fee that consumer would pay for overdrafts if they opted in to Chase's overdraft coverage.

"The initial solicitation used scare tactics," said the Consumer Union's Bowne. It implied that consumers would lose rights and their debit cards would no longer work the same way if they didn't opt in, she said.

Chase altered its pitch materials, following some of the consumer groups' recommendations.

"Our goal with this process is to let consumers know there's a change coming, and encourage them to make an informed decision," said Chase spokesman Tom Kelly. He would not say how many account holders had signed up for the coverage. He described Chase's debit card overdraft coverage as part of "triple protection" consumers can have against overdrawing their accounts, along with other overdraft tools such as a linked savings account and text message alerts about low balances.

Not everyone is being inundated with opt-in ads, Bowne said. She said banks are specifically targeting consumers who she says can least afford it: account holders who have a chronically low balance. Marketing materials at Acton seem to support that claim.

"What you need to do to acquire the highest number of opt-ins, especially from the most important group — the regular NSF (non-sufficient funds) users," the firm says on its Web site.

Not all banks are joining the opt-in marketing party. Bank of America has already changed its overdraft policy and simply will not let consumers overdraw their accounts through debit card purchases. Other banks, such as like USAA Federal Savings Bank, have never allowed such overdrafts.

But the easy money is too hard for many institutions to pass up.  When a consumer with a low balance swipes a debit card to pay for a transaction that would throw their account in the red, banks that don't allow the purchase lose two revenue streams: the potential overdraft fees and the interchange fee collected from the merchant for performing the transaction.  if consumers get in the habit of pulling out another bank's credit card for transactions like these, debit-card issuing banks stand to lose millions in interchange fees, too.

Banks can continue to sign up customers after Aug. 15, so while account holders should expect a crescendo of overdraft protection marketing pitches in the next few weeks, they will continue for months.

"This whole monster has kept growing and growing since we first ran across it," Fox said.  "It's not going away. … There's billions of dollars on the table."

Red Tape Wrestling Tips
It's always important to have a financial plan B. Many folks never think they'll face a negative account balance, yet by some estimates one in three account holders paid at least one overdraft fee last year. Even if you aren't at risk today, now is the time to prepare for a financial slipup.

But there is massive confusion over the best way to do that. You can decide if that's intentional or accidental, but let me sort it out for you.

The short answer: There is no reason for the vast majority of people to opt in for courtesy pay or whatever else it's called. The good news is, the default choice is the right choice, so you don't have to do anything. If you have already opted-in, the bank must allow you to opt back out, and you should.

But you should also find another plan B, and that's where the confusion comes in.

There is good overdraft coverage, and evil overdraft coverage.  With good coverage, you are borrowing your own money, which is relatively cheap. With "courtesy pay" or "automatic overdraft coverage" you are borrowing the bank's money, which is very costly.

There are three easy ways to provide good overdraft protection:  You can link a savings account, credit card or line of credit to your checking account. Once you do, if you bounce a check or exceed your balance with a purchase, the money will be dragged from your savings, credit card or line of credit into your checking account to cover the balance.

There is a cost involved. Chase charges $10 for each automatic transfer from savings to checking, for example.  But that's still quite a bit cheaper than $35. Also, courtesy pay can result in multiple $35 charges for separate transactions on the same day, while linked accounts lead to only a single charge for each day.

Also, it's important to note that courtesy pay isn't guaranteed. Banks cover charges at their discretion. Finally, banks that extended overdraft coverage grab their money the instant account holders make their next deposit, which can lead to more low-balance troubles. Consumers who take advantage of linked accounts can replace the money at their discretion.

Many bank tellers aren't well trained in these distinctions, so it's important that consumers ask for them by name, Fox says.

"Say you want to link your checking account to your savings account. Don't ask for overdraft anything, there's too much confusion about what you are asking," Fox said.

Here's a handy chart of bank overdraft fees and estimated APRs.

 

 

The Federal Reserve placed a soft cap on credit card late fees last week, the latest salvo in an ongoing battle between Congress and corporations that squeeze consumers with punishing surcharges and fees.  It's a small victory for consumers, but on many other fronts in this war the news isn't nearly so good.  When you consider the way new rules are impacting checking accounts and credit card interest rates, and Congress' incredible unwillingness to take a stand on 401(k) retirement account fees,  it seems consumers are getting nowhere fast.

The rule imposing a $25 limit on credit card late fees isn't bad, although it is ironically dogged by fine print. When Congress passed the Credit Card Accountability and Responsibility (CARD) Act last year, it directed the Federal Reserve to take a crack at making late fees fairer.  The Fed issued its new rule last week.

Credit card issuers had been charging $30 to $40 per month when consumers were even a day late paying their bills. Starting in August, the top charge in most cases will be $25, saving consumers from $5 to $15. Not bad, but hardly the signal of a new age in consumer protection. And even that small victory comes with asterisks. Consumers who are late more than once can face a higher late charge. And banks can appeal to the Fed to raise the fee, as long as they justify the costs.

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The Fed rule does offer one piece of unqualified good news for consumers.  Inactivity fees will now be banned. This is important, because the appearance of inactivity fees in recent months led to major confusion for consumers. For years, experts have advised cardholders never to close a credit card account because of negative effects on their credit scores.  The new fees suggested that consumers might be better off closing the cards and taking the score hit.  Now, the old advice is once again valid. Make note, however: Banks can still add an annual fee to your cards, in which case, card holders may be better off closing the accounts to save the money.

The good news ends there, however. Since the passage of the CARD Act last year, half of U.S. cardholders saw their interest rate rise or their credit limit fall, millions through no fault of their credit behavior. Consumer groups had asked the Fed to force banks to roll back those changes. On this issue, the Fed punted, saying only that it would encourage banks to "re-evaluate" the changes.

Don't hold your breath.

The American Bankers Association had a generally positive reaction to the news.

“This brings to a close the most sweeping overhaul of the industry since the invention of credit cards. Taken together, the new rules will provide consumers with numerous tools for better management of their credit costs,” said Kenneth J. Clayton, a senior vice president with the trade group.  And the Federal Reserve Governor Elizabeth Duke said in a release that the new rules require that “late payment and other penalty fees be assessed in a way that is fairer and generally less costly for consumers."

But consumers groups had a much more mixed reaction.

"This is tepid," said Kathleen Day, spokeswoman for the Center for Responsible Lending.  "It's marginally better for consumers, but why not make it great for consumers? ... Once again, the Fed just cannot stand to take a stand. (The Fed) always likes to split the difference. They can't ruffle a few feathers. They are trying to be popular with everybody, rather than do their job as a regulator. How is that working for them?"

That reluctance will almost certainly be tested during the next 12 months, when consumers slowly begin to lose free access to checking accounts. Big banks continue to rattle their sabers about this issue, which threatens to cause a gigantic shift in the American banking landscape. With billions in overdraft fee revenue disappearing when those new rules kick in on July 1, banks have begun testing various fee-based checking accounts.  Soon, simply parking $1,000 in an account or employing direct deposit for your payment will no longer earn a consumer free checking at many banks.

It's been a long time since consumers paid for checking accounts – fee-based accounts went out of favor during the early 1990s --  and the banking world has changed dramatically since.  Today, it's nearly impossible to actively participate in the economy without checking accounts, debit cards, online bill payment and all the other functions that stem from checking accounts. But some consumers who are faced with a $10 monthly fee might join the ranks of the unbanked, using money orders and cash to move around the economy.  Annual fees could also hasten the movement to smaller banks or credit unions, which already has picked up steam. Last year, more than 1 million consumers switched to credit unions, according to the Credit Union National Association. And a study by Bankrate.com found that 39 of the top 50 credit unions offer free checking.

Banks, naturally, will give their largest customers a break.  Use multiple services at a bank and you might enjoy a fee waiver. Rather ominously, the Wall Street Journal reported recently that a Bank of America executive told analysts in April: "Customers will have a choice,... (of) bringing more relationships to us or paying a maintenance fee."

It is undeniable that banks are losing a huge chunk of money as easy overdraft fees disappear. And it's not necessarily bad that banks will be forced to charge transparent, up-front fees rather than back-end, gotcha fees to make their money. It's much more natural for consumers to compare monthly fees than overdraft fees, so the change should be positive for competition.

Switching checking accounts is non-trivial, however, and many consumers will likely just pay up. And of course, the devil is in the disclosures. How will banks communicate the new charges and the new hoops consumers must jump through to avoid them?  At the moment, it will be the Fed's job to make sure the transition is orderly and fair.

Congress could get involved, but if history serves as any guide, federal legislation and Washington's slow-moving ways don't work well for regulating granular issues like monthly fees. Credit card late fees are one good example, but the issues surrounding 401(k) fees take the cake.

It's essentially impossible for a U.S. worker enrolled in a 401(k) plan to determine how much he or she paid in fees on their 401(k) investments during a given year. But the cost can be draining 20 percent or more of a worker's retirement kitty.

The charges are disclosed in oblique ways, such as the common "expense ratio," which is expressed only as a percent to consumers.  Back in 2006, Congress' General Accounting Office found that the vast majority of workers don't understand what they are paying in retirement fees.

There are numerous measures of the cost of unexplained fees, but here's one used in that GAO report: a 45-year old worker who puts aside money in a 401(k) and overpays by just 1 percent in fees will see his available retirement funds shrink 17 percent by age 65. Here's a simpler way to look at it: if a money management company takes 1 percent of your money for 20 years, you'll have almost 20 percent less than you should 20 years later. Obviously, the longer you pay into 401(k) plans, the deeper the cuts are.  A 25-year-old could see more than one-third of his or her retirement money sucked out by Wall Street.

For years, Rep. George Miller, D-Calif., has sponsored legislation that would force investment firms to make those fees clear for consumers. Note, it would not limit the fees; it would merely make them more obvious. And every year, dutifully, Congress finds a way to ignore Miller's proposal.

This year, it looked like the legislation had a real shot. It was attached to the American Jobs and Closing Tax Loopholes Act that was passed by the House of Representatives earlier this year. But the 401 (k) portion was yanked two weeks ago by members of the Senate Finance Committee, which is considering the companion Senate bill.

"(Democratic Chairman Max) Baucus threw it out like a paper airplane," said John Wasik, author of several books on investing, including "The Kitchen Table Investor." "He didn't say why, but I think it was a bargaining chip."  

Exasperated, Miller sent a pie to each committee member last week with a one-third slice removed.

"At a time when the middle class has already lost too much of their retirement savings because of the financial scandals, they shouldn't also be losing out because of unconscionable hidden fees," Miller wrote in a letter that accompanied the pies.  "I urge you to stop Wall Street from hiding 401(k) fees by restoring the House disclosure provisions. The 50 million Americans with a 401(k)-style plan deserve a fighting chance to keep more of their retirement pie."

Clearly, the Senate doesn't agree.

Wasik said the Department of Labor, which regulates retirement accounts, is planning to come out with its own set of 401(k) fee disclosure rules within the next few months.  He's optimistic that those rules will deal with many of his concerns, but until they are published and take effect, U.S. savers will remain largely in the dark.

Which brings us back to the point at hand: Credit card fees, checking account fees, retirement fees and most other hidden charges are simply too elusive for Congressional legislation.  You wouldn't expect Congress to legislate the details of an off-shore oil drill's blow-out preventer -- only a regulator with specialized skills and the ability to act fast can provide the needed oversight.  And only an agency with the ability to set and adjust rules on the fly can prevent the gushing of Americans' money out of the checking accounts and retirement accounts to hidden fees.

That the idea behind the Consumer Financial Protection Bureau, which is part of the financial reform legislation that's now in the stretch run in Washington.  Final details about the agency's reach and influence are still in flux, but as currently constituted, it would have the ability to review the credit card and checking account rules issued by the Fed, according to Day, from the Center for Responsible Lending.  It could, for example, lower that $25 maximum credit card late fee.

"It's very inefficient to get all this stuff through Congress, and then industry just finds its way around it anyway," Day said.  "That's a bad way to stamp out bad products.  We need a new consumer protection agency."

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In New Hampshire, residents pledge to "live free or die." Apparently, that even extends to online banking.

An eagle-eyed New Hampshirite named Dave recently took out his magnifying glass and spotted a new fee in the small print at his bank's Web site. Customers who want to send money from Citizens Bank to an account at other bank — say a brokerage account or a high-yielding Internet savings account like ING Direct — must now pay.

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"Just $3 for outgoing transfers to other institutions," the notice says. It came as part of an announcement titled "New, improved Web site."

Dave, who requested anonymity, didn't see it that way.

"Apparently banks are now charging sneaky transfer fees," he said. "With people going to online banking, banks are starting to charge ATM type fees for transfers."

After complaining to the bank and getting an unsatisfactory response, Dave told his bank that he would live free or …

"I told them I would probably look for a new bank," the 45-year-old said.

Easier said than done, however. Dave's other bank, JP Morgan Chase, also charges the outgoing transfer fee. And in fact, many big banks now tell their online consumers they can't send their money to another bank without paying the $3 fee every time. Curiously, incoming transfers are free. In other words, the bank will gladly take your money, but it won't give it back without a fight.

Mike Jones, a spokesman for Rhode Island-based Citizens Bank, said the new fee actually represents a cost savings for consumers. Before August, Citizens account holders had to use wire transfers to send money to other institutions, which cost $18 to $35. The $3 fee is a bargain, he said.

"This is part of several enhancements to our online banking platform," he said. "We are doing it to increase convenience, and it comes with a cost savings for consumers."

The interest-rate chase
Bank-to-bank transfers have become common at a time when consumers are fighting for every quarter-point of savings interest they can earn. Checking account interest rates are at historic lows. Internet-based savings accounts offer slightly better rates and have attracted about $160 billion in deposits since they exploded onto the scene in the early part of this decade, according to the Tower Group, a financial research firm. Other consumers chase higher yields through money market funds offered by brokerage accounts or other banks. It all leads many customers to habitually move money around to capture that interest.

If that's you, watch out. A few transfer fees could wipe out that extra interest you think you're earning.

Many online banks, such as HSBC, waive outgoing transfer fees for their Internet accounts. But traditional checking accounts often come with the fee, a disincentive for moving money out of their accounts.

"It definitely seems unfair, but I'm not surprised. … This is another example of nickel-and-diming customers to death," said Kathleen Day, a spokeswoman for the Center for Responsible Lending. "Consumers account for $7 out of every $10 in this economy, and it is so unproductive that the financial community is sucking every spare penny from consumers for this non-productive enterprise. The irony is that this nickel-and-diming is hurting our chance of an economic recovery."

Greg McBride, an analyst for Bankrate.com, said that consumers should get used to these kinds of fees.

"This is the banks' equivalent of sticking their tongue out at the customer when they take their money out," he said. While consumers get used to the idea that they can improve their returns with just a few clicks of a mouse, banks will continue to devise disincentives to stop them.

"There's more where that came from."

RED TAPE WRESTLING TIPS
Consumers can generally avoid this outgoing transfer fee. Because banks accept incoming transfers free, account holders should always have the destination bank initiate the transfer. In other words, if Dave wanted to move money from his Citizens account to an ING Direct account, he should initiate the transfer from his ING account — telling ING to "pull" the money in, rather than telling Citizen to "push" the money out. At least for the moment, "pulled" transfers remain free.

Curious about high-yielding savings accounts? Visit bankrate.com's interest rate page or highyieldcheckingdeals.com 

 

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Traditionally, buying a home has been "free," at least with regard to real estate agents. Sellers pay steep commissions -- usually around 6 percent – which are split with the shoppers' agent. That allows home buyers to focus their energy on hunting for hidden fees from their mortgage provider.

But a disturbing trend that has emerged recently threatens this tidy arrangement. Some buyers' agents are now slipping junk fees into their contracts. Usually labeled "administrative fees," they range from $195 to $500. While their legality is in dispute, they have become commonplace. Virginia real estate broker Frank Llosa, who exposes real estate agent tricks on his blog "FranklyRealty," says perhaps 40 percent of buyer contracts now have administrative fees tucked inside.

"I don't think it's right," Llosa says. "I don't believe in administrative fees and I don't think any buyer should pay them."

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These new junk fees are even more disturbing when they are not properly disclosed. Many buyers work with agents on a fairly informal basis and only sign an agency agreement when making an offer on a house. Then, they sign dozens of forms, making an agency contract with an administrative fee easy to miss – particularly since most have the expectation that the agent is working for free for them.

Sometimes the fees aren't disclosed until closing day. They don't appear on the Good Faith Estimates provided by banks when pricing mortgages, for example. Instead, buyers' agent fees first appear on the complex HUD-1 settlement form given to both parties at the closing table. At that point, it's difficult for a buyer to stop the proceedings and argue about the fee. That's why it's always best to ask for a preliminary HUD-1 draft estimate, which is often available 48 to 72 hours before closing.

The fees began appearing about five years ago, Llosa said. But now, say other experts, they seem to be in vogue as brokers struggle to stay afloat during the housing market bust. He said a few real estate brokerage firms are trying to attract talented agents by promising that deals will include administrative fees that they can keep.

When compared to the purchase of a $250,000 home, which could generate a $15,000 commission, a $250 junk administrative fee might seem trivial. But by the time agents split commissions with each other and their brokerage agency, commission checks could be whittled down to $3,000 to $4,000, so $250 is a sizable tack-on.

That doesn't mean you should pay it. Many buyers have simply refused to pay it, crossing it off the agency agreement, said New York-based real estate attorney Jeff Arouh.

"A sophisticated buyer may say, 'I'm not going to pay that fee,'" he said. But if the issue is unresolved until closing day, that's another matter, he said. "You might get angry, but are you going to lose a deal because of $250"

Against the law?
There is another critical question to be answered about administrative fees: Are they legal? A buyer named Vicki Busby, of Alabama, is suing her real estate agency over a $149 administrative fee she was forced to pay, and seeking class action status for the case. Believe it or not, there are laws against unfair fees.

The Real Estate Settlement Practices Act of 1974, which governs home purchases, includes provisions designed to prevent junk fees. Silly as it may sound, the law dictates that fees can only be collected for services actually provided. That means junk fees levied simply for the heck of it are not allowed.

When challenged, some real estate agents argue that administrative fees are office-related charges -- document preparation, and the like – that traditionally have been covered by the sizable commission checks. But Arouh said agents may be able to stay on the right side of the law if they simply itemize their services in a way that links the administrative fee to a particular service, such as assistance in mortgage application preparation.

He also said that's splitting hairs.

"The services of a real estate broker are those of a professional, and they agree to be compensated for providing a bundle of services and that bundle is reflected in commissions," he said. "I think administrative fees are inappropriate, but that's my opinion. I come from the school of thought that if you are a professional you deal with (consumers) as a professional and you don't nickel and dime them."

That school, apparently, is suffering from severely reduced enrollment at the moment.

RED TAPE WRESTLING TIPS
• It's nice to go shopping with an agent without having a signed agreement, as that keeps you a free agent. But when the time comes to make an offer on a property, don't just gloss over the agency agreement because your agent now seems like a friend. Look specifically for the words "administrative fee." If you find them, refuse to pay it. No agent will lose a deal over the administrative fee.
• If you feel the agent was deceptive in communicating the fee to you -- you have the sense that her or she tried to sneak it by you while signing other papers, for example -- give that some thought. If your agent operates with that m/o, what else might he or she hide from you? Consider changing agents.
• Get a preliminary HUD-1 form as early as possible, and look for the words "administrative fee." If you see it before you get to the closing table, you'll have a much easier time fighting it.
• Remember, no matter whose relative the agent is, he or she has a strong incentive to persuade you to buy something -- anything. Agents make money by closing deals, period. So maintain an arm's-length relationship.

While most people see high gas prices as serious problem, marketing gurus see them as an opportunity. It's almost impossible to turn on the TV, get gas or go shopping now without hearing about some great new way to cut down your gas bill. Many of these offers may sound tempting, but beware the fine print booby traps.

Topping the list of gas discount offers is Chrysler's $2.99-per-gallon promotion. But credit card companies, rental car firms and even local tourism boards all are making similar pitches. All of them should be taken with a grain of salt, or maybe taken with one of those little pills you drop in your gas tank to improve your gas mileage (kidding!).

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Chrysler's deal is perhaps the most tempting. The car seller promises the security of $2.99-per-gallon gasoline for the next three years. In a world where pump prices have gone mad, heading now towards $5 in some place, $2.99 gas seems like a great deal.

But hold onto your gas hoses. Chrysler's offer has many nuances, but it boils down to this: Most new car buyers are familiar with the choice they often get between a cash rebate or low-rate financing ($3,000 cash back or a 0 percent loan, for example). Well, the discounted gas is simply a third choice. In other words, those who take the gas offer surrender all or part of their rebate and access to the cheap loan.

I like to keep things simple, so the standard advice applies here: for the majority of car buyers, your best bet is to take the rebate. Cold, hard cash is simple.

The truth is, even with $5 a gallon street prices, given the limitation of 12,000 miles worth of gas per year, Chrysler's $2.99 offer is pretty close to a wash when you surrender the rebate. Obviously, the specifics can vary wildly, but for argument's sake, here's a scenario -- at 20 mpg, Chrysler would discount 600 gallons of gas per year, saving a buyer $600 if the street price is $3.99, and $1,800 over three years. Is that worth surrendering a $1,500 rebate, which could add $1,500 and the associated finance charges to your car loan? Probably not. In some cases, Chrysler will let buyers who take the gas offer keep part of the rebate, which complicates the math further, but you get the idea.

Of course, you can imagine a scenario where Chrysler's deal leaves you ahead -- say, if pump prices explode towards $10 a gallon. There are other ways that the $2.99 gas card might pencil out for you -- say if you plan to buy a gas-guzzling diesel truck, for example. The folks at Consumer Reports have performed painstaking math on your behalf. You can see their efforts here and decide for yourself if you want to play gas price roulette with Chrysler.

But even if gas prices rise to $7 or $8 a gallon, and you save a bundle on gas for three years, you still might end up losing in the end, says Jeff Bartlett, auto expert at Consumer Reports.

"After three years, where are you going to end up? With two disappointing scenarios. Either you go back to paying full price for gas, or you say, 'I bought a gas guzzler, how am I going to sell that?' " The resale value of low-mpg cars is sure to plummet as gas prices rise, he said, so it's important for the consumer consider the total cost of ownership -- including resale value -- when considering any sales incentive.

Credit card gas discounts

If you think the Chrysler discounted gas deal is confusing, check out credit cards that discount gasoline prices. Without looking too hard, you can find offers that sound too generous to be true -- 10 percent off a gallon of gas, for example. Again, the higher the price goes, the better these deal sound. I don't mean to burst your bubble, but here goes.

First off, these cards do not lower the price of gas, despite the clever marketing campaigns. They provide rebates. And those rebates are slow in coming. Many cards only provide them once each year, in the form of a credit on the credit card bill. The credit might seem like a generous amount, but if you sign up for one of these cards at a nearby gas station seeking relief from high pump prices, you will wait a long time for that relief.

But that's only the beginning of the booby traps to be found on gas discount cards. Most cards offer a teaser discount rate, which then drops down to a much lower rate after a couple of months. For example: The Citi Dividend Platinum Select Card offers 5 percent off gas for 6 months, and then 2 percent off after that. Some card's teaser rates vanish in as little as two months.

Then there's this: Some cards limit the rebates you can earn each month or each year. With the Citi card, for example, the annual limit is $300. There's also a minimum purchase required -- drivers who don't earn at least $50 in credits get no rebate at all.

Despite all those restrictions (and we've omitted plenty of others), Bill Hardekopf of LowCards.com says consumers can get a worthwhile deal with gas rebate cards if they carefully dissect the terms and conditions before signing up.

"You can make some pretty good money on a rebate card but you have to really know what you are doing," he said. For example, the BP Visa Rewards Card offers sizable rebates of 5 percent -- but only for gas purchased at BP, of course. The card might make sense if you frequent a BP station around the corner, but it certainly wouldn't make sense for consumers to go out of their way to buy BP gas.

"We recommend making yourself a grid. Include the introductory offer, the ongoing offer, if there's a cap, and so on, to make it easy to compare," he said.

Here are two places to compare gas discount credit cards: LowCards.com and CardRatings.com.

Of course, the most important thing to remember with all rebate cards is this: if you don't pay your balance in full each month, you lose. Few consumers plan to carry a balance, but about half ultimately do, so it's important to be realistic about your ability to avoid finance charges if you sign up for a gas card. If you carry a balance on any other card, you probably don't need any more plastic in your wallet. And remember that applying for multiple credit cards within a few months will likely hurt your credit score, a penalty that could be far more costly than an annual $300 rebate for gasoline purchases.

Other gas deals

The tourism industry is filled with trepidation about the summer travel season, with many families scaling back driving plans. As a result there are genuine incentives that are worth checking out. You can find rental car offers than include a free tank of gas, for example, which could be worth $50-$100. But watch out. Don't let the rental car firm talk you into a gas guzzler (rental car lots are full of underused SUVs right now), which could eat away at your discount. And make sure to price rental cars using other traditional discounts, such as an AAA card. You might get a better deal by forgoing the free gas and taking a better price.

Meanwhile, car renters are also offering discounted gas if you prepay at the time of renting. That deal is only worthwhile if you are clever about returning the rental car with a nearly-empty tank.

Local tourism boards also are nervous and are trying to attract travelers who might be making other plans. Some car-oriented destinations are offering gift cards to tourists who book their trips. Here's a series of offers from the New Hampshire tourism board, for instance.

Some hotels and travel sites like Expedia are also offering gas gift cards as an incentive for booking travel. These deals are pretty straightforward.

Finally, even grocery stores are getting into the act, offering discounted gas to loyalty card holders. Kroger's Co. offers 10 cents off per gallon after shoppers spend $100 at the store. Nothing against FDR, but one thin dime is hardly worth changing your gas buying habits for.

Penny wise and pump foolish

That brings me to my final point. Consumers tend to be very price sensitive, and marketers are keenly aware of this. But while trying to chase down lower gas prices, many drivers are penny-wise and pump foolish.

A survey conducted in 2007 by petroleum retailers found that one in four car owners said they'd drive 10 minutes out of their way to save 3 cents per gallon. That makes no sense. Taking that extra trip saves a driver 36 cents on an average 12-gallon fill up, but it costs about $3. Assuming the driver averages 45 mph, getting to that magical discount gas station will end up requiring a 15-mile detour, round trip. Assuming the car gets 20 miles to a gallon, and the price of gas is $4, the extra trip costs $3, or nearly 10 times the amount saved!

And so it is with gas discounts. Despite the high price of gas, consumers who try to chase a few extra pennies should be aware they might end up being led by the nose into a money-losing deal.

Here's a comprehensive list of other gas-saving deals.

Have you found any gasoline discount deals that really work for you? Share them here.

I hope you're sitting down while you read this. One of America's largest rental car companies is about to eliminate one of the vacation industry's most notorious hidden fees. And I'm about to lavish it with praise.

Hertz last week announced it would stop charging car renters an arm and a leg for gasoline when they return rental cars with half-full tanks. You know the drill: When you rent the car, you're given a Russian-Roulette kind of choice: 1) paying up front for gas, thereby paying for more than you will use; 2) agreeing to fill the tank yourself and running the risk that you will be too late to do it; or 3) paying for the rental firm to refill the car after you drop it off. Those after-rent gas prices have been ludicrously high for years, generally about double the street price for a gallon of gas. Currently, Hertz refuel prices are about $8 per gallon in many locations, making travelers liable for surprise fill-up charges of $100 or more.

But beginning July 1, that will change at Hertz. Renters will instead pay fair market value for gas plus a $6.99 fee for the refueling service. That will end one of biggest hassles that travelers face -- the desperate search for a gas station near the airport while trying to leave enough time to check in and clear airport security checkpoints.

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Hurray for Hertz, which as the world's largest consumer rental firm has the power to steer the industry in the right direction. Consumers should consider renting from the firm, even if its rates are slightly higher, because they won't be on the hook for the refueling "gotcha" any longer. That's a valuable feature. It will be interesting to see if the company actually benefits from doing the right thing. I hope so.

The move is not entirely born of largesse. Earlier this month, the Maryland state attorney general forced all rental car firms in the state to substantially lower their refueling penalties. In Maryland, rental firms must now limit their refueling price to about 140 percent of the prevailing market price. The agreement lowered the per-gallon gas charge at most firms from $8 down to a little less than $6.

"As a result of these agreements, Maryland will have among the lowest, if not the lowest, rental vehicle refueling charges in the nation," Attorney General Douglas F. Gansler said while making the announcement. It's good to see that state enforcement agencies can recognize eggregious practices and force change. It's too bad Maryland or some other state didn't take the same tack a few decades ago, but better late than never.

Skyrocketing fuel prices helped draw attention to rental car companies' crazed pricing practices. When gas was $1.40, $2.80 refueling prices didn't seem quite so bad, but $8-per-gallon prices are indefensible.

"Car rental companies realize that motorists have had it with gas prices, and they are running out of patience," said Catherine Rossi, spokeswoman for the American Automobile Association's Mid-Atlantic office. "We are pleased that the Maryland attorney general's office addressed this with the car rental companies and we hope other attorneys general will follow suit."

Hertz deal even better
But Hertz has gone farther than Maryland required, offering a better price and extending the deal to the rest of the country. The firm claims its new pricing plan has nothing to do with the threat of legal action in Maryland. Even if that's a fib, I don't care. Hertz has seen the light. Now let's see if other rental car firms are forced to play nice. So far, Hertz's top competitors haven't extended their new, low refueling prices outside of Maryland.

"We're taking a close look at it, but do not have a decision to announce at this time," said John Barrows, vice president of communications at Avis Budget Group.

Here's a case where the light hand of government intervention could really help a market function properly. Let's say Avis, Budget, and other competitors stick to their guns and continue with crazy refueling prices. Hertz will obviously lose money on this deal, and be put at a competitive disadvantage. It will likely raise prices slightly to cover the revenue lost through the new policy. That means consumers who search for rental cars at travel sites like Expedia or Orbitz might be tricked into renting a car at a slightly lower up-front price, but one that comes with the risk of a high penalty fee at the end of the rental. As a result Hertz's competitors will rank higher in search engines that sort by price. That's unfair to Hertz, when its ultimate rental price might be cheaper.

It would be better for Hertz, and I would argue better for the entire industry, to have state attorneys general from all around the country, or the Federal Trade Commission, step in and say, "$8 gas prices are obviously unfair, and this practice must end." Enforcement of a simple rule that's already in many state lawbooks, which says that penalty charges must be aligned with actual costs incurred by the company, would suffice. And it would create a level playing field.

Perhaps that will happen on its own. Perhaps consumers will react so positively to Hertz's new policy that other car renters will have to imitate it. We'll have to wait and see.

Red Tape Wrestling Tips
*It's important to note that it will still be cheaper for you in most cases to fill the tank yourself than to let Hertz do it for you. Hertz's fair pricing simply provides a nice insurance policy if you are running late to the airport. One other note from Hertz's announcement: The firm is also offering small discounts to those who buy their gas up front when renting a car -- 15 cents per gallon off prevailing market price. That deal sounds tempting, and it might be convenient for business travelers, but those who pre-pay for a full tank usually lose because renters cannot return the car with an empty tank. Whatever's left in the tank is free gas for the rental car firm.

*Other rental car companies are also offering pre-paid gas discounts too. In some cases, these discounts might make sense -- those with large SUVs planning on car vacations might be better off renting a small car with this cheaper rental car gas. An excellent comparison chart can be seen at SmartMoney.com.

*In the meantime, Hertz and other rental car companies are capitalizing on consumers' fixation with gas prices and offering various "free gas" deals. At Hertz, for example, renters booking a minimum of three days can get a free tank of gas at some locations. Look for similar deals from other renters.

Consumers love the savings that come with those plastic discount cards. But they have drawbacks. An MSNBC.com "Gotcha Room" report, by Bob Sullivan, with Producers Andy Gross and Colleen Sanvido, graphics designer Patrick Longstreth, and editor Nat Cohen.

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