Outraged about bank fees? You’re not alone. Citizens Bank recently started charging me $3 per month to mail my monthly bank statement. Bank of America recently announced they would soon start charging $5 per month for using their debit card. And just last week three large banks were sued for allegedly colluding to fix ATM fees. Add to these costs, overdraft fees, phone transfer fees, inactive account fees and you’ll see that it’s a veritable fee for all! According to an April study by the Pew Charitable Trust, checking accounts at the 10 biggest U.S. banks had a median 49 different types of fees.
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| Infamous Banker Ebenezer Scrooge from Walt Disney's A Christmas Carol |
Here are 5 tips to help you avoid rising bank fees
1. Talk to your bank: You may qualify for free checking if you sign up for direct deposit of your paycheck, use your debit card a certain number of times, or keep a minimum balance. It’s not always easy for consumers to get clear information about bank fees so make a point to call or sit down with your branch manager and ask.
2. Don’t Use Out-of-Network ATMs: Why tolerate high ATM fees? It is not uncommon for consumers to sometimes pay twice for one ATM transaction – first your bank charges you $2 and then if you’re using an “out of network” ATM, the ATM owner charges you another $2 surcharge. That’s crazy, especially when you’re withdrawing $40 for a night out on the town.
Make a point of using your own banks ATM and withdraw enough cash to last you until you can get to the “free” machine again. If you find yourself without enough cash, get cash back at the point-of-sale when using a debit card. Go to a grocery store or any other retailer that would give you cash back. Buy a small snack if you don’t need to buy anything else. Heck a $1 can of soda or bag of chips is cheaper than $4 in ATM fees; plus you get to enjoy the snack!
3. Go Paperless: You can save money and often avoid statement fees, fees for copies of cancelled checks and other costs by choosing to receive your statements online, or by email.
4. Avoid Penalties: One way banks are trying to recoup revenue is by increasing penalties for bounced checks and late credit card payments.
The Overdraft or the NSF fee is one of the most expensive fees banks charge. The very best way to avoid this is to manage your checking account wisely -- reconcile your account each month and develop a system so you don’t forget to deduct ATM or check payments. If you don’t already have overdraft protection, be sure to apply for this feature. If approved, the bank will link your checking account to a line of credit so overdrafts are paid. You’ll still pay a fee for this service, but it’s a lot less than a bounced check fee.
Similarly, late payments on credit cards are brutal. Miss the due date by even one day and don’t be surprised to see a $35 late payment charge. One easy way to avoid these mistakes is to set up a monthly payment (EFT) that will be automatically deducted from your checking account each month.
5. Change banks: A recent Facebook campaign organized by the Occupy Wall Street movement is urging Americans who are fed up with escalating bank fees to close their accounts at the large banks (especially the ones that took federal bailout funds) and move their money to small banks or credit unions by November 5.
But switching bank accounts isn’t easy, especially if you use direct deposit, have set up electronic funds transfers to pay for your gym membership or have set up online bill payment. Still, many small banks and credit unions are seeing a flood of new depositors. According to Jim Rice, Senior Vice President at Harbor One Credit Union, “Over the last several months, we have seen a noticeable lift in new account sales as a result of consumer frustration with big bank fee increases."
Keep in mind that fees should not be the sole determinant to whether you stay at your existing bank or not. Personal service, branch location, the size of the ATM network and a variety of other factors should be considered before making a change. As in life, it’s not usually a good idea to make decisions purely on emotion.
