Tips on Reducing Bank Fees
According to a report released by the FDIC and the National Credit Union Administration, banks, thrifts, and credit unions collected a record US$37.8 billion in service charges in 2005. Bounced-check, ATM, and overdraft fees are setting records; consumers are paying higher service charges than ever for checking accounts; banks are requiring higher balances on interest-bearing accounts, and banks that issue credit cards are increasing fees for late payments and over-the-limit charges.
But bank charges are largely avoidable, if you read the fine print on your bank’s fee schedule. Follow these top tips for better banking and bring down your banking bill:
1. Don’t "branch" out – Always use your bank’s ATM machines; transaction fees for using other bank machines can really rack up. This can be achieved by withdrawing a lump sum at the beginning of the month or by using your debit card for purchases. Even this system may not be charge-free; check if your bank is charging you per ATM/debit transaction, or if you are paying a lump sum for these services every month.
2. “Courtesy overdraft” not so courteous - One of the newest fees — and one of the most profitable for banks — is the “courtesy overdraft.” If you don't have enough in your account to cover a check, the bank might automatically pay it and then charge you up to $35. More than 80% of large banks do it; a third of them even kick in additional fees if overdrafts aren’t paid back in an average of five days. Instead, it is usually cheaper to transfer funds from savings, or sign up for an overdraft line of credit.
3. Is “free checking” really free? – Don’t bank on it. Almost every bank offers free checking, that is, accounts that by law can't require a minimum monthly balance or charge a monthly fee. But that doesn't mean that banks can't charge you for a host of other services, such as getting copies of checks, inquiring about balances, and spending more than you have. Note: Courtesy overdraft is often tacked onto free checking accounts, making them far from free if you don't read the fine print.
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