Avoiding Bank Fees
Banks make a lot of money when they loan money and collect it back with interest. However, banks also make a lot of money with the fees that they charge customers. In fact, this actually accounts for billions of dollars in annual revenue for banks.
Here are some things to watch out for when dealing with banks.
1. The most obvious fee that tends to sneak up on people is the overdraft fee. This overdraft fee can be accessed for writing checks or using your debit card when you do not have money in your account to cover the expense. Usually the fee is accessed for each occurrence and is usually $25 or higher.
The first thing you can do to avoid this fee is to be diligent in recording charges in your account. With the invention of debit cards, this is a challenge for some people. They stuff receipts in their purse or wallet and then never record them or lose them. If you find yourself being one of these people, you should consider switching to cash. Go to the ATM and withdrawal cash and then when you pay with cash you do not have to worry about writing anything down.
The second thing you can do is tell your bank you do NOT want overdraft or over limit protection. Most banks give you this and you probably do not even know it. This is a certain amount, usually $500, the bank allows you to over draw from your account when you do not have funds. Of course when you do this, there is a fee and the banks love you to do this. Originally the banks said it was to prevent people the embarrassment of being in a check out line and being declined. In my opinion, I think I would rather be declined because if I do not have money to buy the item, I do not need it.
2. The second type of fee to watch out for is monthly fees, especially related to checking accounts. The banks market will usually give you some type of extra services and then charge you $5 to $10 dollars a month. These services may be free checks for your account or special check cashing considerations. Do you really need these? You can order 250 checks for about $15 and this amount of checks lasts the average person more than a year. If you pay $5 a month for your checking account that provides you with free checks, you are spending $60 per year. This is $45 more than you need to be - the cost of several nice meals.
3. The third type of fee is the ATM fee. Usually there is no charge if you take your ATM or debit card to your bank’s ATMs and make a withdrawal. However, if you use another bank’s ATM there will be a charge, usually $.20 for each $10 you take out of the ATM. You should look for a bank that will reimburse you for these fees. My bank does not have ATMs in my area but it will reimburse me up to $6 per month in ATM fees. This is more than enough for the average person.
Another way to avoid ATM fees is to get cash back with your debit card purchase. Many stores allow you to do this, and there is no extra fee associated with this.
In this day and age, there is a lot of competition for your money between banks. So shop around and find one that meets your needs without charging you a lot of those unnecessary bank fees.
Banks make a lot of money when they loan money and collect it back with interest. However, banks also make a lot of money with the fees that they charge customers. In fact, this actually accounts for billions of dollars in annual revenue for banks.
Here are some things to watch out for when dealing with banks.
1. The most obvious fee that tends to sneak up on people is the overdraft fee. This overdraft fee can be accessed for writing checks or using your debit card when you do not have money in your account to cover the expense. Usually the fee is accessed for each occurrence and is usually $25 or higher.
The first thing you can do to avoid this fee is to be diligent in recording charges in your account. With the invention of debit cards, this is a challenge for some people. They stuff receipts in their purse or wallet and then never record them or lose them. If you find yourself being one of these people, you should consider switching to cash. Go to the ATM and withdrawal cash and then when you pay with cash you do not have to worry about writing anything down.
The second thing you can do is tell your bank you do NOT want overdraft or over limit protection. Most banks give you this and you probably do not even know it. This is a certain amount, usually $500, the bank allows you to over draw from your account when you do not have funds. Of course when you do this, there is a fee and the banks love you to do this. Originally the banks said it was to prevent people the embarrassment of being in a check out line and being declined. In my opinion, I think I would rather be declined because if I do not have money to buy the item, I do not need it.
2. The second type of fee to watch out for is monthly fees, especially related to checking accounts. The banks market will usually give you some type of extra services and then charge you $5 to $10 dollars a month. These services may be free checks for your account or special check cashing considerations. Do you really need these? You can order 250 checks for about $15 and this amount of checks lasts the average person more than a year. If you pay $5 a month for your checking account that provides you with free checks, you are spending $60 per year. This is $45 more than you need to be - the cost of several nice meals.
3. The third type of fee is the ATM fee. Usually there is no charge if you take your ATM or debit card to your bank’s ATMs and make a withdrawal. However, if you use another bank’s ATM there will be a charge, usually $.20 for each $10 you take out of the ATM. You should look for a bank that will reimburse you for these fees. My bank does not have ATMs in my area but it will reimburse me up to $6 per month in ATM fees. This is more than enough for the average person.
Another way to avoid ATM fees is to get cash back with your debit card purchase. Many stores allow you to do this, and there is no extra fee associated with this.
In this day and age, there is a lot of competition for your money between banks. So shop around and find one that meets your needs without charging you a lot of those unnecessary bank fees.