Last week, I bumped into a friend at the bank in my local supermarket. He was hitting up the automated teller machine and cursing about needing to pick up some cash so quickly that he had to pay a fee to do it.

"You probably hate it when people pay a fee to get their own money," he said, "but I'm consoling myself with the fact that it's only a buck."

He was right and wrong.

I do loathe bank fees, especially when they can be avoided simply by using a machine from your home bank (mine is the one in the supermarket). But his cost of getting cash on the quick and convenient was not just a buck; that was the fee my bank charged for using its ATM, but it excluded the fee his own bank tacked onto the deal.

All told — and he confirmed this for me later, after checking with his bank — he was miscalculating the cost of using a "foreign" ATM by 50%. And he is far from alone.

The Fall 2005 Checking Study released last week by Bankrate.com showed that the cost for using the "wrong" bank machine has reached an all-time record, with the average total fee now standing at $2.91.

That figure covers the $1.54 average fee assessed by the banks that own the ATM you are using, and the $1.37 average fee that banks charge customers who use a foreign ATM (and almost 70% of banks now charge customers this secondary charge).

Bankrate.com estimates that consumers will pay more than $4.3 billion in fees this year, just for withdrawing their own money in a way that most people justify as "more convenient."

So it's not "only a buck." Two trips to a foreign ATM per week, and it's about $300 bucks over a year. In a home earning the nation's median household income, that's more than one half of one percent of all the money brought in for a year.

Beyond rising fees, it's clear many consumers simply are unaware of what is happening in their own accounts. Fee-change notices tend to arrive from banks attached to statements, and most people hardly pay attention to their bank statement, let alone balancing their checkbook to reconcile all of those little fees and see just how quickly they add up.

Rules also vary from account to account; one institution may not charge the additional fee for using a foreign ATM, but may tack a charge on every time the customer uses a debit card at a point-of-sale terminal.

Worse yet, those rules are a moving target buried in fine print and legalese that the consumer ignores, assuming everything has remained precisely as it was when the account was opened. (That's the assumption my friend made; it turned out he had been paying higher fees for several years.)

"It is nickel-and-diming people on a massive scale," says Daniel Ray, editor at Bankrate.com. "It's not that someone who knows all of the fees will avoid them altogether — they may still need to get cash in an emergency or may pay for convenience once in awhile — but they will probably be smarter about how they do their banking."

The Bankrate survey also found that bounced-check fees now stand at an average of $26.90, the second-highest level ever, and that interest-bearing checking accounts typically work out to be a poor deal for consumers. The average interest-bearing checking account requires $450 to open (compared with $72.50 for the average non-interest-bearing account) and requires an average balance of nearly $2,300 to avoid fees that typically are aggressive enough to swallow up a few months' worth of interest on a low-dollar account. (By comparison, the average non-interest account has an average balance of $301.50 to avoid fees.)

"Consumers really need to know the rules, and to follow the changes to their accounts," says Ray. "It's not the same with every bank and every account, so you need to find a bank that works well with your habits, or you're going to have to change your habits to work with your bank. Otherwise, it's going to cost you."

Percentage game

To really see how a percent here or there matters, consider the Dec. 1 birthday celebration for the Putnam Investors Fund (PINVX) , one of the fund industry's pioneers dating to the 1920s.

To my knowledge, Putnam Investors is just the third fund to actually survive to its 80th birthday (many early entrants were merged out of existence decades ago).

Since the fund shares a birthday with my father — though he is one year older — its birthday prompted me to wonder what my father would be worth today if someone had invested in the oldest mutual funds for him way back when.

He'd be rich, but small differences in returns would be the difference between a good life and "beyond his wildest dreams."

The Massachusetts Investors Trust — now run by MFS (MITTX) — was the first domestic mutual fund, and a $10,000 investment when the fund opened in 1924 is worth about $12.5 million today, thanks to an annualized average gain of nearly 9.2%.

Putnam Investors has done just a bit better since opening in 1925, gaining roughly 9.65% annually, which doesn't seem like much, until you recognize that $10,000 invested at inception is worth more than $15.5 million today.

The second domestic mutual fund was State Street Research Investment, which turned 80 years old last year (and which this year — as the result of a merger — was folded into a sister fund in the BlackRock family, murdering its track record in the process).

By my calculations — updating information I last checked in 1999, with significant help from Lipper Inc. — the State Street fund shows the real value of an extra point or two in returns.

Over its first 80 years, and through the end of 2004, the average annual gain was around 12%. Had one of my father's relatives celebrated his birth with a $10,000 investment back in 1924, my dad would have a hair over $117 million today.

That's no misprint, just proof that investors who surrender little bits of money — in fees or returns — are giving up a lot over a lifetime of investing.