Money Management
How to Avoid Some All Too Common Bank Fees
Today it seems that bank fees are just a way of life. Although some institutions may still offer “free” checking a look at the fine print will reveal a number of ways that your account will end up costing you money. However there may be a few ways to beat some of the biggest charges that banks may try to assess to your account.
Recently Amy Livingston of Money Crashers highlighted some common bank fees and how to avoid them. Here are three examples:
Overdrafts
Perhaps the most dreaded of all bank fees is also one that’s nearly completely dodgeable: overdraft fees. One of the reasons these fees are somewhat tricky are because you’re typically asked if you’d like to opt-in to receive “overdraft protection.” This might sound like a good thing but in actuality it could cost you a fortune. Basically, instead of merely declining your debit card and/or check if there’s not enough money in your account, overdraft protection will let the transaction post but then charge you upwards of $30 dollars for the convenience. Worse yet the fee is per transaction so you can quickly rack up quite a debt. Some have even questioned the order in which items post as it may sometimes seem that the largest transaction posts first leading to even more fees.
The best thing to do is decline overdraft protection and let your transaction be declined if you do not have to funds to cover it. If you do have overdraft protection be sure to pay close attention to your account and move money as needed. Alternatively, if you have a credit card with the same bank, they may offer the ability to automatically put overdrafts on you credit account instead. However they often still charge some fee for this service and so it’s better to monitor your account and make sure you have enough money to cover any given transaction.
ATM fees
ATM fees can often be a double whammy as not only will you pay the owner of the ATM a fee (usually $2 to $3.50) but then may also be required to pay your bank a fee as well. This might not be a problem if you are able to visit your bank’s ATMs but, if you’ve moved to an area that your bank doesn’t service, those fees can add up over time. One relatively simple solution is to take advantage of cash back options on transactions when they are offered. Many grocery, convenience, and other stores will allow debit card holders to request a certain amount of cash back on their transactions. For example, if your goods were $10 and you wanted $40 cash back, your card could be charged $50. Additionally some banks — especially online-only ones such as Ally — may offer reimbursement of ATM fees so it may be worth looking into a bank with that option.
Maintenance fees
According to Bankrate the average monthly account maintenance fees is $14.76. Typically this fee is waved if you maintain a certain daily balance — the average threshold being $7,211. If you don’t keep that much on hand in your checking account (and, since it’s a daily balance requirement, if you dip below that amount at any point during the month you’ll get charged) you may want to look and see what else you can do to have the fee waived. While requirements vary greatly between banks many will offer exceptions for those who use their debit cards a certain number of times a month, receive direct deposits from their employers, or meet certain demographic requirements like being a student. Also note that banks can add these fees to your account even if they weren’t there when you opened it, so be mindful and watch out for alerts from your bank.
Think your checking account is free? Reviewing all the rules of your account may tell a different story. While banks may charges fees for everything from having an inactive account to having an overly active account, knowing about these fees can help you to avoid them. Lastly, if all the nickel and diming does get to be too much for you, it may be time to break up with your bank and see what better offers you can get elsewhere.
