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By Bill Jacky
Discovering your checking or savings account has been charged an unexpected fee is annoying. While it can be easy to shrug it off with a sigh as a “reality of the cost of living today,” don’t! These fees can add up. Americans, on average, are charged about $7 in banking fees each month, or around $84 a year. In fact, the Consumer Financial Protection Bureau estimates the big banks charged consumers $7 billion in fees in 2022. It’s in your best interest to be familiar with the most common fees so you can always stay one step ahead of them – and keep your money in your account.
You bounced a check. In other words, you spent more than your current balance. Mistakes happen! Most often a bounced check occurs when you write a check against a recent deposit which hasn’t cleared the bank yet. If and when this happens, your bank can charge you an overdraft fee. While varying by bank, the cost for overdraft fees could cost you around $35 per transaction, according to the FDIC (Federal Deposit Insurance Corporation). If your bank charges “continuous” or “daily” overdraft fees, you could be charged the same fee every day if your account remains overdrawn. To make matters worse, if the party receiving the check is a business or other creditor, they could also levy a “non-sufficient funds” (NSF) charge against you.
To avoid overdraft fees, find a financial institution that offers checking and savings accounts that won’t charge overdraft fees. Fortunately, alternative financial institutions – i.e., not the big banks – have embraced a trend of wiping out overdraft fees altogether.
It’s important to note, however, the recipient of a bounced check you’ve written could still charge you a fee for writing an NSF check to them. To avoid an NSF fee from a creditor or store, opt into overdraft protection if your bank offers it. With this protection, your bank will pay for a debit card or ATM transaction even if that transaction overdraws your account. If you have a savings account at the same financial institution, you should be able to designate that savings account as a back-up to cover overdrafts. In other words, the bank pulls funds from your savings to cover any shortage (if you have enough in your savings account, of course). You might still be charged a fee for this protection, but it is typically less than an overdraft fee.
Banks will commonly charge you a “maintenance fee” on your checking or savings account each month. Many will reduce or eliminate this fee if you have a direct deposit into that account, maintain a minimum balance in your account or perform a certain number of transactions each month.
Open or move your accounts to a bank or credit union that doesn’t charge account maintenance fees. A quick online search will reveal your best options. Alternatively, ask your financial institution if maintenance fees can be avoided by direct depositing your paycheck or opening multiple accounts.
If your current checking or savings account requires you to stay above a minimum balance to avoid a monthly maintenance fee, constantly checking your accounts to ensure they remain above the minimum balance may be unrealistic, let alone stressful. Plus, you may face a month of overwhelming expenses or a financial emergency that makes a low balance a necessity. If you fall below the minimum, you must pay the maintenance fee for that month. If this is your current situation, check if your financial institution offers low-balance alerts, which can help you avoid dropping below the minimum balance requirement.
Almost all bank or credit union accounts give you the option between receiving paper statements via the mail or accessing eStatements online or via a mobile app. Some banks charge you a fee for each paper statement. Choosing to receive eStatements eliminates the need to keep, store or shred paper statements.
This one’s easy: Log on to your account online to make the change to eStatements if your financial institution offers them. Your bank or credit union may even reach out to you via email or their mobile app to see if you’d like to switch to receive your statements electronically. This quick, easy action will save you a few dollars a year. Bonus benefit: Receiving electronic statements can help protect you from identity theft since printed statements can get lost in the mail or be intercepted by thieves.
Even today, there are still places where cash is king or times when it’s easier to have some 20-dollar bills in your wallet. More often than not, an ATM that is on-premises at a restaurant or bar, near an event space or not at your home bank comes with ATM fee. So basically, using ATMs = paying fees, right? Not necessarily!
Look for banks and credit unions with a large ATM network. It might require some searching on your part, but when there are ATMs every six blocks or so, you can avoid a fee by going a short distance.
But for the sake of convenience, you sometimes can’t avoid ATM fees…but you can be reimbursed for them if your bank or credit union provides ATM rebates for certain number of transactions. Online banks especially have adopted this rebate service to help customers when they want cash in their pocket. It’s a win-win for these banks and credit unions: The credit union or bank does not need to pay for the costly maintenance of their own ATM network and you don’t have to worry about ATM fees. You’ll now also have the guilt-free freedom to use the closest ATM, eliminating fee-based ATM hunts.
The fees above are not an exhaustive list of possible fees you could be charged by your financial institution now or in the years ahead. For example, an “excessive withdrawal fee” or an “inactivity fee” may be uncommon, but these and other obscure potential charges make it important to remain vigilant about reviewing your account statements for the unexpected. The best way to rest easier about new or potential fees? Switch to a checking or savings account without any maintenance fees at all.
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