I came across a good post recently from Bargaineering via The Consumerist blog about some common bank fees that need to be avoided. Here are the big three with a brief explanation and my 2 cents on how to avoid them in the future…
1. Overdraft Charges – You get this charge when you spend more than you have in your bank account. So if you have a balance in your account of $100, and you make a purchase on your debit card for $150, you can expect to get drilled with an overdraft charge. In my opinion, this is a great fee, because at some point you’re going to get tired of paying it and you’ll stop spending more than you make! Brilliant!
- Avoid This Fee: Pay Attention. If you live off a written budget, you should always be safe, but you still need to keep an eye on things. I check our accounts online every few days, just to make sure everything is going where it is supposed to go.
2. Minimum Balance Requirements - Some accounts require that you maintain a certain balance level, such as say $100. So if your account were to hit $99, you would be handed a fee.
- Avoid This Fee: Talk to your bank and make sure you don’t have this requirement on your account. If you do, there are plenty more options out there, and you should probably explore a different type of account or a different bank altogether.
3. Non-Network ATM Fees - Banks will allow you to make transactions from their ATMs, but if you use someone else’s ATM, you’re going to pay for it. For example, if you have an account with Bank of America, you can use any of their ATMs for free but if you use a Wells Fargo ATM to make a transaction, you’ll pay for that privilege.
- Avoid This Fee: Use the envelope system. I’ve talked about this before, but my wife and I pay for a lot of things in cash…we just plan for what those purchases will be and use an ATM with our bank to avoid fees. ATMs are dangerous, because they can seem like quick-access piggy banks, but only use ATMs to get cash for planned purchases, not spur-of-the-moment buys.
One other great point from this article, that I completely agree with, is that if you ever do have a fee, ask for it to be refunded. If you’re a good customer and especially if this is your first fee, call up the bank, act super nice, and see what happens. It never hurts to ask. In the past, I’ve done this and on several occasions have gotten fees taken off my account.
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4 Comments
As a person who works for a bank, every fee that a bank charges can be avoided if you just follow the rules and regulations on your account. Know what you are signing up for and what it requires of you. The bank is not there to manage your money, it just keeps it safe for you. It is your responsibility to balance your checkbook.
Also Grant, you would think that Overdraft fees would keep people from overdrawing their accounts, but it doesn’t really work. My bank charges 25 to 35 dollars per transaction that posts negative. This can easily add up to HUNDREDS of dollars in fees, yet I see habitual offenders all the time!
Also, a fee a lot of people don’t realize can happen is a withdrawal limit fee from your savings account. There is a federal regulation that limits the number of withdrawals you can make from a savings account to 6 per statement cycle. Some banks have actually lowered that number to 3 or 4 per cycle. The fee for going over this limit is 12 dollars at my bank, and if you go over the limit enough your interest earning savings account will be converted to a non interest earning checking account. Afterall if you are taking money out more than 6 times you are using it like a checking account.
As a person who works for a bank, every fee that a bank charges can be avoided if you just follow the rules and regulations on your account. Know what you are signing up for and what it requires of you. The bank is not there to manage your money, it just keeps it safe for you. It is your responsibility to balance your checkbook.
Also Grant, you would think that Overdraft fees would keep people from overdrawing their accounts, but it doesn’t really work. My bank charges 25 to 35 dollars per transaction that posts negative. This can easily add up to HUNDREDS of dollars in fees, yet I see habitual offenders all the time!
Also, a fee a lot of people don’t realize can happen is a withdrawal limit fee from your savings account. There is a federal regulation that limits the number of withdrawals you can make from a savings account to 6 per statement cycle. Some banks have actually lowered that number to 3 or 4 per cycle. The fee for going over this limit is 12 dollars at my bank, and if you go over the limit enough your interest earning savings account will be converted to a non interest earning checking account. Afterall if you are taking money out more than 6 times you are using it like a checking account.
@Betsy Good thoughts…thanks for contributing!
Hi Grant – great post! Just wanted to share some additional information on overdraft fees.
The Federal Reserve recently proposed rules that give bank customers more choices when it comes to overdraft programs. The “opt-in” rule would require banks to ask you if you want to participate in their overdraft programs rather than singing you up automatically.
The Fed is accepting public comments on its proposed rules until March 29, so if folks are frustrated with overdraft fees, tell the Fed you want a choice! Without public support, the proposed rules may not be enforced.
The Center for Responsible Lending has set up a page to get more information, and to help you send a comment to the Fed: http://ga3.org/campaign/no_gotcha_fees