By Linda Stern

WASHINGTON (Reuters) - Merger mania is reducing the number of big banks. The top 10 credit card issuers are now the top eight credit card issuers.

Fleet Bank's business is disappearing into Bank of America. BankOne's plastic portfolio will be turned over to JP Morgan Chase, a company that is already an amalgam of disparate financial companies.

This may or may not be good news for shareholders, but it's not great for bank customers.

"Bigger banks means less choice for consumers," said Edmund Mierzwinski of the US Public Interest Research Group, a Washington-based watchdog organization.

He sees a future in which there are enough financial institutions to escape the kind of concentration that brings on the Justice Department's antitrust lawyers, but not enough institutions to offer broad choices to savers and spenders.

In fact, there are thousands of small community banks, credit unions and other credit card issuers, and Mierzwinski would be the first to tell consumers to initially look there for good loan and savings rates.

But he believes that, especially when it comes to credit card issuers, the big boys dominate. And as they get bigger and bigger, and consolidate their accounts, there will be fewer real credit card deals out there. Bank of America is unlikely to go out of its way to win over Fleet customers, for example, if it already bought all of their accounts when it acquired Fleet.

For now, there's enough competition to give consumers some ability to comparison shop. But here's some advice for consumers whose banks keep getting bigger, if not necessarily better.

-- Read all the inserts with your credit card bills carefully. Not the ones pushing clock radios and extra insurance (for a fee), but the ones that explain the terms of the card and the address to which your checks must be sent. Banks, especially those that are consolidating, may change their check processing and mailing address.

Send your check to the old address and you can end up paying late fees for a bill you think you paid on time.

-- Don't fight the power all the time. Banking behemoths afford some advantages to their customers. Mainly, that comes in the form of vast ATM networks. They also tend to cross-sell their services, so if you leave money in a savings account or CD, you can get free checking or other services.

With interest rates as low as they are now, it may make sense to just keep at least some of your savings, checking and borrowing business with the same institution. You might get better deals, and they might work a little bit harder to keep you happy.

-- But, don't overconsolidate. Your bank deposits are only covered up to $100,000 at each institution, though you can get more coverage than that if you have individual and joint accounts at the same bank.

Better to spread that wealth a bit by keeping it at different banks. This may mean that you have to diversify after a bank merger, if it results in two of your banks becoming one.

You can also get higher levels of insurance by depositing money in a group of smaller community banks subscribing to an independent service called Certificate of Deposit Account Registry Service. That allows them to allocate deposits among themselves and offer up to $5 million in FDIC insurance to their depositors. You can find them listed at http://www.CDARS.com.

-- Consider using a credit union, or at least keeping an account alive at a credit union, if you qualify. They usually have lower fees and may offer better rates on car loans and home equity lines.

-- Prepare to shop and shop. Credit card and checking account terms seem to change daily. As banks consolidate, you'll find fewer deals coming to you. To really get the best rates, you might have to re-compare credit card deals and account fees more than once a year. You might even have to switch from one provider to its competitor every year. It sometimes helps to keep two credit cards alive with competing issuers, and just use the one that currently has the best terms.

-- Don't fall for phish. Those big banks are the ones most often spoofed online by crooks who want you to think you're talking to your bank when you e-mail them your PIN number. But you aren't; it's a scam known as phishing.

If you get e-mail from your bank asking you to verify your personal data, pick up the phone and call the number on your statement (or credit card) to find out whether the e-mail was legit. That's not likely. It's more likely that your bank will contact you with real, old-fashioned paper in an envelope, if it's changing your terms or needs more info from you. (Linda Stern is a freelance writer who covers personal finance issues for Reuters. Any opinions in the column are solely those of Ms. Stern. You can e-mail her at lindastern(at)aol.com).

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