How to Avoid Hidden Bank Fees
It seems that every few months one of the big banks tries to raise fees or charge us extra for keeping our money with them.
Earlier this year Bank of America said that they were going to charge $5 per month for account holders to use their debit cards.
Before that, Citibank told us they were increasing the fees for minimum balance requirements.
While both of those proposed fees were shot down amid public outrage, many more fees are quietly put into effect without us really being aware.
Since it is nearly impossible to survive in today’s economy without having a bank account and a way to move money around electronically, we decided to take action. This guide is intended to show you just where those hidden fees are, and more importantly, how to avoid them.
Common hidden bank fees:
1. Fees for online services
It seems hard to believe, but banks actually charge fees for services that cost them less money to execute. They call it a convenience fee, but there is nothing at all convenient about being charged 50 or 75 cents for making a deposit from a smartphone.
Some of the larger banks are doing just that. There are, however, plenty of smaller banks that offer terrific online platforms for use by smartphone and tablet devices, and that do not charge a fee for the privilege. My suggestion is to look for one of these institutions.
2. Maintenance fees
It costs big banks between $150 and $200 to open a new account. Annual maintenance of the account can add another couple of hundred dollars to that.
In an effort to offset these costs, many banks charge a monthly fee for accounts below a minimum deposit amount. Many people think of these fees as just another unavoidable service charge, but that is not true.
Actually, many credit unions and some smaller banks charge little or even no maintenance fees to their customers – regardless of their balance on deposit.
3. Stealth fee increases
Banks are required by law to inform their customers in advance of any changes to the fee structure they charge. Unfortunately however, it is usually buried in the fine print of the four-page document that comes with every monthly statement.
Most people – even if they could understand it – do not have the time to read through all of the legal jargon.
In order to identify these stealth fee increases, it is worth comparing your monthly bill with previous statements to look for increases in amounts charged.
“That is how banks are able to get
away with secretly raising fees.”
4. Overdraft fees
Many people see overdraft protection as a protective service offered by banks. In fact, it is one of the biggest fee generators for banking institutions – and what is good for the banks generally is not good for us.
Here is why. Most overdraft charges are the result of debit card transactions.
The average debit card transaction is around $24. The average overdraft fee is now $34.
Avoid overdraft fees altogether by opting out of your bank’s program. When you do this, a debit card transaction will fail to go through if you do not have enough in your account to cover it.
5. Fee overload
Even after recent changes to the banking laws were implemented, bank fees remain an area of confusion and frustration. There are currently more than 50 possible checking account fees that a bank can charge its customers.
Many banks charge multiple fees for similar services or conveniences. You can avoid many of these fees by looking for banks that are transparent in their fee implementation.
Many smaller banks and most credit unions fall into this category.
There really is no need to give money to the banks to supplement their bottom line. Doing a little research and choosing the right banking relationship to fit your lifestyle can help you avoid fees.
A little research can pay you big dividends – instead of paying the banks.
Photo source: abcnews.com.