(MONEY Magazine) – THIS MONTH: --A better way to pay bills --High-paying CDs for small savers

For U.S. banks, 1997 was the year to eat or be eaten. Acquiring banks spent a record $73 billion on takeovers this past year, which included the two largest-ever U.S. bank merger announcements: NationsBank will devour Florida's Barnett Bank, swelling NationsBank by 3 million customers to 16 million; First Union will buy Philadelphia-based CoreStates, fattening itself by 4 million customers to 16 million. Why should you care? Because, in general, any new merger presents an opportunity for the resulting behemoth to squeeze consumers.

Consider this: Studies show that large banks typically charge higher fees than small ones and, further, that less competition can slowly but surely lead to lower deposit rates and higher loan rates overall. "In the long run, consumers can get hammered by bank mergers," says Robert Heady, publisher of the industry newsletter Bank Rate Monitor.

Unfortunately, the merger frenzy shows no signs of abating. Thanks to rising bank stock prices and permissive federal bank expansion laws, acquirers have the resources and the freedom to feast. Result: If your bank hasn't yet merged, it may soon. Within the next few years there will likely be only 8,000 U.S. banks left vs. nearly 10,000 today and some 14,500 in the mid-'80s, says Warren Heller, research director at Veribanc, a Wakefield, Mass. bank rating firm. Here's how to protect yourself:

--Look locally for a better deal. Immediately after a merger, the surviving local rivals often vie for disaffected customers by offering deals such as free checking. When Wells Fargo merged with First Interstate in 1996, for example, Glendale Federal, the sixth largest thrift in California, ran ads touting cheaper checking and no fees for teller visits.

--Shop carefully for the best savings rates. Mergers can lead to lower deposit rates. Bank Rate Monitor found, for instance, that within a year of the NationsBank 1997 takeover of Boatmen's Bank in St. Louis, the yield that former Boatmen's customers earned on a six-month CD dropped by five-tenths of a point, to 4.2%, even though the national average rose slightly, to 4.89%. Your best move, especially if you keep $5,000 or more in a CD: Stash your savings at banks around the country that offer the most tempting rates. (See the table on page 153 for the best rates nationwide.)

--Cut checking account fees by paying only for services you use. The bigger your bank becomes, the higher, in general, the checking fees. However, those fees usually cover many services, such as live tellers or returned checks. If you don't use the extras, see if your newly merged bank offers a free or low-cost, no-frills checking option.

--Shop at a small bank or a credit union for a home-equity line of credit or a car loan. Unlike mortgages, the rates on home-equity lines of credit and car loans are largely influenced by local lending conditions. As a result, such loan rates are likely to creep up as the competition dwindles. To get the best rate, scour your local newspapers for surviving smaller banks that offer solid deals. Or join a credit union; they offer car loans that are typically 1.5 percentage points cheaper than bank loan rates.

One caveat: If you're addicted to ATMs, keep in mind that a bigger bank means a larger number of bank-owned ATMs. So if you stick with the newly merged giant, you'll have access to more ATMs without having to pay a $1 or so surcharge for each visit that banks typically impose on noncustomers.

--If you seldom use an ATM, you might want to bank with a broker. Most major brokerages offer so-called asset management accounts, which let you consolidate your banking and investing in one place and qualify you for bennies such as free check writing. The biggest disadvantage is that brokerages don't operate their own ATMs, thus leaving you exposed to surcharges when you use a bank ATM. But why would you care about that if you don't use ATMs? If your bank's offerings are unappealing, you can open an asset management account as long as you keep at least $5,000 in various accounts with your broker.

--If you decide to invest through your bank, act like a big fish. One goal of the new superbanks is to handle your investing as well as your banking. U.S. Bancorp, for example, plans to buy brokerage Piper Jaffray this year. First Union lets its customers buy more than 780 no-load funds through Schwab's OneSource. But remember that as a customer with significant assets, you have the upper hand. After all, you can always take your business back to a broker. So if you use your bank as a brokerage, make sure your checking account is free. And don't be shy about asking for a lower credit-card rate or a higher CD rate. That way, you too can come out financially fatter when your bank gets gobbled up.