4 Ways to Avoid Bank Fees
Anyone with any kind of bank account is acquainted with bank fees. Sometimes they’re expected as in the case where you sign up to pay a monthly fee for your checking account. At other times though, they’re quite unexpected, as in those all too typical cases where you get dinged with an overdraft fee. It’s these unexpected banking fees that you want to avoid because they’re the ones that put a real crimp in your budget. Here’s what you can do.
Right off the bat, you should carefully read and then (maybe) opt out of your account protection benefit package. Banks have lots of different names for these and they claim to offer you some kind of protection but sometimes they offer the banks the opportunity to charge more fees when you dip into the negative side of your balance. That’s not really protection.
In the old days banks would bounce checks when your balance couldn’t cover them, charge you a fee, and that was that. Now banks often “arrange” your checks and debits to suit their revenue agenda before they process them. This gives them the ability to break your balance so to speak by allowing your transactions to process but then to charge you multiple overdraft fees. If your particular plan opens the door for this, cancel it.
The next thing you can do to avoid bank fees is to link a savings account to your checking account. That way when you make a debit or pass a check that runs your checking account into the negative it will be covered by a transfer from your savings. Of course the bank will charge a fee for this transfer but that’s okay. It will be much smaller than any overdraft fee would have been.
Another way to get the upper hand on bank fees is to sign up for automatic account alerts. These can usually be configured to come to your email inbox or even to your phone. The value here is that you’ll always have a way to look up your balance and see what transactions have and haven’t cleared. That way you won’t be caught flat-footed when you want to make a purchase but a previous charge that hasn’t cleared yet or a deposit that hasn’t credited yet. Knowledge is power.
Finally, if you want to avoid bank fees altogether you can start changing your spending habits. Move away from the bank and move toward one of the prepaid debit cards on the market today. They work just like MasterCard and Visa cards do but you load them up before you spend. They don’t have overdraft fees because you can’t spend more than your balance because those transactions are simply rejected.
Reloadable debit cards do have their own fees but they’re simpler to understand than bank debit cards and bank account fees. And an added bonus is that when you spend down your balance on a prepaid card you can simply choose not to reload it and walk away. Banks are a little tougher to free yourself from.
Bank fees account for more than 50% of bank revenue today. That’s up from 35% a mere 10 to 15 years ago. Fees are a multi-billion dollar revenue stream for banks and they’re going to always look for new and (shall we say) “creative” fees to apply to your account. Keep your eyes open and guard your money well.
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