It’s legal for banks to charge for bank charges and fees.We are going to discuss how you can keep these expenses as low as possible.
The three biggest banks in America charge over $6 Billion for overdraft and ATM fees reports CNN –Money.
Overdraft fees can be as much as $34 per transaction.
If you overdraw your account only once a month, you will be losing about $400 a year.
Fortunately, there are a few ways to outsmart the system and allow you to keep that money in your pocket.
Say no to overdraft protection:
Banks have to get permission before enrolling anyone in their overdraft coverage program.
If you want to avoid most ATM and debit card overdraft fees, you can opt out.
The only downside, however, is that your purchases can be declined and you may have to find another way to pay for your purchases.
You can use a credit card but be sure to pay off the bill in full each month or you’ll end up with interest charges that are most likely even higher than the non-sufficient fund fees.
Depending on your bank, you can still overdraw your account you previously set up for automatic payments or you may have written a check without having enough money to cover the transaction.
If that should happen, you might be charged an insufficient funds fee or a returned check fee. Exercise caution.
Link accounts to allow transfers:
If you do not want to be left out in the cold with your checking account, you can link a debit card to your savings, credit card or credit line.
If you overdraw, your bank will take the money from the other account to cover the cost.
You will probably still have to pay a fee but it is usually less than an overdraft fee, averaging around $10 for most banks.
1.Sign up for alerts:
The easiest way to avoid overdraft fees is to keep an eye on your account.
You can sign up to receive email or text alerts when your balance gets low, so you will never be surprised.
2.If possible, avoid out-of-network ATM machines:
Banks also cash in on ATM fees.
Let’s say that you withdraw money from an out-of-network ATM once a week.
If you pay the average ATM fee of around $4.37 to $4.52 each time, you could rack up $230 in fees in just one year.
You can get cash back at the register without fees at many drug stores, grocery stores, post offices and many more locations.
You can often withdraw up to $100 and it does not cost you a dime.
If you have no choice and have the time, hunt down an in-network ATM.
Usually you can withdraw money for free by using your bank’s ATM.
Always plan ahead so that you know where to go when you are in a pinch.
If you are one of the fortunate few, some banks will reimburse you for fees charged at out-of-network ATMs.
You could get a maximum of $10 to $20 back each statement cycle.
3.Meet minimum balance requirements:
You bank seems to have a surcharge for everything and it’s perfectly legal.
They can charge from human teller fees to returned mail fees. The average maintenance fee on a checking account runs about $13.29 a month-that’s just under $160 per year.
You can avoid these fees by upping your balance enough to meet the minimum amount or by signing up for another service, like direct deposit.
Check out the options at your bank.
4.Take your statement online:
Give up paper statements and avoid the $3-$5 fee.
Banks will send you an email every month when your statement is ready at no cost.
5.Cut back on withdrawals:
Withdrawing money from your savings account can cost you a fee if you exceed the common withdrawal limit of six times per statement cycle.
After this limit, you could be charged a fee of about $10 each time.
If you go over the limit just once per month, you’re looking at $120 each year.
If this is normal for you, get in the habit of taking out more money at a time and cut down on the number of times you withdraw from your account.
Also, read the fine print. Sometimes you just need to keep your balance above the minimum to get this fee waived.
6.Let your account see some activity:
Inactivity fees can range from $3 to $12 or more a month and are usually applied after you go 60 days to a year without making a deposit or withdrawal.
In one year, you could rack up $80 in fees just for doing nothing with the account.
7.Tired of the Mega banks?
Why not hop over to the bank next door?
If you prefer a personalized experience in a hometown atmosphere, then regional and community banks may be right up your alley.
MoneyRates.com, a personal finance website that compiles information on bank rates and investing, found that while smaller banks are not always as sophisticated as the big guys, their checking accounts often have lower monthly fees and almost half the required minimum balance to waive fees.
8.Move your money online to skip sneaky fees:
Internet-based banks are becoming more and more popular.
They have no brick-and-mortar locations and carry fewer overheads.
As a result, they do not have to charge much to turn a profit.
According to MoneyRates, more than half of online checking accounts surveyed had no monthly maintenance fees.
Choose an online bank over a traditional one and you might save $160 a year in fees alone.
Exercise due diligence when choosing any bank.
The downside is that you cannot visit a physical branch to check out the bank before you set up an account.
However, you can verity that the online bank of your choosing is insured by the Federal Deposit Insurance Corporation (FDIC).
This means that the government will cover $250,000 per account if the bank fails.
9.Draw more interest when you drop the banks altogether:
Unlike banks, credit unions are not-for-profit organizations owned by members.
For that reason, you can usually find lower fees, higher interest rates on savings accounts and lower interest rates on loans.
For example, the rate for a 4-year new car loan generally averages 2 percent lower at credit unions compared to banks.
It may not sound like much but over the course of a loan, this lower rate can very well save you $1,350 in interest.
You may have to meet certain requirements to join a credit union.
Many times members live in the same area or work at a particular business but you should be able to find some credit unions that are open to members nationwide.
The National Credit Union Administration (NCUA) is a federal agency that supervises and regulates credit unions.
They also manage the National Credit Union Share Insurance Fund (NCUSIF) which works like FDIC insurance to keep your money safe.
Check that this is in place before joining.
10.Simple step keeps fraud in check:
Although this advice does not involve fees, it is good to know as it can give you some peace of mind: Never write checks with a regular pen if you plan to mail them.
It could cost you your life savings.
Identity thieves steal checks from mailboxes and use common household products to wash off the entire handwritten information on the check except your signature.
Then they rewrite the check to themselves for any amount they please. To prevent this, use a pen that writes in permanent ink.