Because of more recent laws set up by Congress, along with hyper-aggressive scrutiny by regulators, banks’ traditional revenue streams have been throttled. This has forced them to come up with other ways to replace this lost revenue, and this directly affects you. Whether they take the form of monthly maintenance fees, overdraft fees, or online bill pay fees, bank fees are increasing in volume and amount.
US News has an article, 9 Ways Consumers Can Avoid or Minimize Bank Fees, that may be of interest to you. They mention that it’s not always easy to know before you open an account exactly what fees will be included. So how upfront are banks with their fees? WalletHub did an analysis of checking accounts from some of the largest banks and credit unions that offer online applications and published their findings. Pew Charitable Trusts has been encouraging banks to make simple disclosures for consumers, summarizing their on average 40 page account agreements (which is full of small-font legalese that nobody reads).
From the US News article:
“Bank fees are getting more expensive, and they’re getting harder to avoid,” says Richard Barrington, senior financial editor for MoneyRates.com, which found in a 2015 survey that monthly maintenance fees for checking accounts have risen 8.36 percent in the past three years, twice the rate of inflation, and that only 25 percent of checking accounts did not charge a monthly fee. “Checking is getting more expensive, and it’s getting harder to avoid the monthly maintenance fee,” he says.
Here are their nine ways consumer can avoid or minimize bank fees, with some commentary (and corrections) by us:
- Choose no-fee checking and savings accounts. There are a few free checking accounts around, usually with minimum balance and/or direct-deposit requirements. Follow their rules and you won’t get charged.
- Opt out of overdraft protection. If you opt out and don’t have enough money in your account, your everyday ATM and Debit Card transactions will be declined and you won’t incur an overdraft fee. Opting out is the default, by law, but many banks will push you to opt in. NOTE AND CORRECTION: The US News article mistakenly says you can opt out of overdraft “protection”. This is misleading. What you, by default, opt out of is the bank’s overdraft “process” for everyday debit card and ATM transactions. But you will still want to enroll in overdraft “protection” if you write checks and use bill pay. These are two separate items. Opting out of the the ATM and Debit card “process” does not apply to checks you write–you are at the mercy of the bank’s overdraft fees if you write a check or schedule bill pay and you don’t have sufficient balances to cover it when it shows up at the bank/is taken out of your account for payment. So you may want to opt in to overdraft protection for checks and bill pay. But opt out of overdraft for everyday ATM and Debit Card transactions. If you have any questions about how this works, leave a comment below or email us at firstname.lastname@example.org.
- Sign up for alerts. Most banks let you get alerts via text or email. You get to set the threshold saying when you want to be informed.
- Avoid ATMs that are not part of your network. You may be charged by both your bank and the institution where you used the ATM. There are apps (including your bank’s mobile banking app) that can help you find in-network ATMs.
- Ask for accounts for older people or students. Many banks offer free or low-cost checking accounts to people over 50 or students. They often have lower minimum balance requirements.
- Keep more money in checking. Interest rates are so low that you will save more money by keeping additional money in checking, to avoid a monthly fee, than you will receive in interest by having that money in a savings account.
- Shop around for accounts that fit your lifestyle. Do you use ATMs or branches often? What about paper checks or online banking? Find the account that offer the services you need at the lowest cost.
- Negotiate. Branch managers sometimes have the discretion to waive fees, especially if you are a good customer. Some banks will waive the fees when you call customer service.
- Keep an eye on your accounts online. Keep an eye on your balance. Watch for fraud or errors on your account. If you use your debit card often you should check your transactions every day.
Following these guidelines can help you avoid or minimize bank fees. Find a checking account that meets your needs and find ways to reduce the amount of money you give away to your bank.
Click here for the full article from US News.