Millions of Americans are having their financial accounts slowly drained by a silent vampire. Some people don’t even know it is happening while others suddenly find themselves a victim. We’re referring to financial account fees.
In this article, you’ll learn about different fees that your bank can charge for a number of reasons. Just knowing these fees exists is the first step in avoiding them. The second step is to avoid putting yourself in a situation where you have no choice but to incur the fee.
Are Banks Really Charging That Much?
As customer accounts grow, so have the fees bank charge. The two most common that nail unsuspecting customers are overdraft and ATM fees.
Overdraft Fees
According to a 2017 Bankrate checking account survey, the average overdraft fee is $33.38, up one percent from 2016. How do you incur this fee? By spending money you don’t have.
As an example, if your bank account has only $50 in it and an automatic payment to your utility company drafts $100, you’ll incur an overdraft fee. The payment will likely fail for the utility company, which means now you’re on their bad side and could incur fees from them as well. It’s a downward spiral.
Tracking your spending and watching your bank account can help avoid this situation. $33 is nothing to sneeze at. It’s hard earned money that you get zero return on when it’s thrown away to overdraft fees.
ATM Fees
The next category where money is slipping through people’s fingers is ATM fees. This fee is often incurred because people don’t plan ahead. If you use your bank’s ATM, there is unlikely to be any fee associated with the transaction. Check with your bank of course to verify. The problem with ATM fees arises when you use an ATM of a bank you don’t do any business with. This is called an out-of-network ATM.
Bankrate found that in 2017, the average cost of using an out-of-network ATM was $4.69, which is up 2.6% from 2016.
The way to avoid ATM fees is to be sure you’re always using your bank’s ATM. Locally, you should get to know where those ATMs are. When out of town, you can find your bank’s ATMs by searching for them on its mobile app.
There are going to be some cases when you are out of town and your bank has no ATMs in the area. Some banks have a network of ATMs that you can use just for that type of case. Check with your bank on which ATMs you can use to avoid incurring a fee. Also, ask if the mobile app searches for these no-fee ATMs.
Other fees to watch out for include:
- Account maintenance — incurred when your balance falls below a minimum balance required by the account. $10 to $25.
- Transfers to bank accounts abroad — a typical fee amounts to over $40.
• Returned deposit — funds are not available to cover a check, $15 to $30.
• Debit card replacement — replacing a lost debit card, $5 to $10 per card.
• Stop payment — cancel an outstanding check, $15 to $30 per check.
• Wire transfer — same day transfer of money, $30.
How Can You Avoid Fees Altogether?
Using financial software that is able to download your bank transactions will help you more easily monitor your bank balance. Some banks also let you set alerts if your balance reaches a certain level. That can be helpful in the case that you don’t download or monitor transactions for several days.
Overdraft protection is usually available for most accounts. It is a service that you will need to opt into. Most banks don’t charge for using overdraft protection if you are using an internal account.
Overdraft protection works by linking your checking account to a second, usually internal, account. This can be a savings account, another checking account or even a credit card that you have with the same bank. When an overdraft occurs, the bank will automatically pull funds from the overdraft protection source, thus avoiding large overdraft fees.
As mentioned earlier, many fees can be avoided simply by knowing they exist and not putting yourself in a situation where you are triggering the fee.
Tools To Help You Stay Ahead of Fees
There are a number of tools to help you avoid fees. Bank Fee Finder is one such tool. It’s a mobile app that you connect to your accounts. The app scans the accounts to find out where you are paying fees. It then displays this information so you can take action.
By monitoring your financials with tools like Empower, and Bank Fee Finder, you will know exactly what fees you’re paying and find ways to avoid them — e.g. using new tools like Transferwise and Wyre for any international transfers, and talking to your bank about any other fees they put on your accounts.
Bank accounts aren’t the only place to search for fees. You can also find out how much your 401k is zapping from your account in fees. America’s Best 401k is a great tool for that.
Now that you are aware of various fees and how they are triggered, you’re all the wiser about how to avoid them.
