Are You Paying These 6 Unfair Banking Fees?
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The average checking account has about 30 different fees.
So it's not a surprise that many Americans are considering dropping their banks and choosing a credit union instead. (See also: 9 Good Reasons to Choose a Credit Union Instead of a Bank)
However, a total switch may not be necessary if you're able to significantly lower your banking and finance fees. Here are six fees that you really don't have to pay.
1. ATM Fees
Some ATM usage fees are just outrageous. For example, using a non-Bank of America debit or credit card for a withdrawal, transfer, or balance inquiry at a Bank of America ATM has a $2.50 fee per transaction in the U.S., and $5.00 in a foreign country. The same fees are applicable when you use a Bank of America debit or credit card at an ATM outside their network.
Here are some strategies to avoid paying ATM fees:
- Know what ATM networks belong to your network. Most banks have a page that details this information on their websites. Bookmark it on your desktop and smartphone.
- Use cashback. Several retailers, such as CVS and Safeway, allow you to get cash back when using your debit card to process payment. If your bank doesn't charge you fees for using your credit card (more on the next point), then you can take out money without any charges.
- Look for banks that reimburse other bank fees. For example, USAA Bank refunds up to $15 in other banks' ATM usage fees each month. Also, Ally Bank reimburses all other bank's ATM fees nationwide.
2. Checking Account Fees
Most banks charge between $10 and $20 every month to maintain a checking account with them. That add ups to $100 to $240 per year in unnecessary banking fees! Follow these tactics to avoid checking account fees.
- Meet the monthly minimum or average balance requirements for your account. This amount varies per bank so make sure to check with yours.
- Find out if your bank waives checking account fees by signing up for direct deposit. Even if your bank doesn't waive the fees, this service helps you to meet the minimum balance requirements more easily.
- Open a checking account with a credit union. Virtually all credit unions don't charge fees for checking accounts.
- Do your homework. Certain banks waive checking account fees to special demographics, such as university students, senior citizens, or current armed forces service members and veterans.
3. Overdraft Fees
About $31 billion are paid every year in overdraft fees around the country. In theory, overdraft fees are there to protect you when your checking account or credit card hs $300 and you decide to make a purchase for $320. The problem is that financial institutions and lenders are selectively choosing when to charge overdraft fees, which range from $25 to $35.
Let's imagine that you have a credit cards balance of $30. Throughout the day, you spend $5 in breakfast, $15 in lunch, and $20 in dinner. If the fees were to be charged chronologically, you would only pay one overdraft fee. Unfortunately, some credit card companies selectively charge the fees so that you get dinged with the fee more than once. Suddenly, you are on the hook for up to $70 in overdraft fees.
To make matters worse, while 70% of checking account holders incur no overdrafts per year, about 82% of checking accounts are hit with up to three overdraft charges per year. The conclusion? Do not sign up for any service labeled "overdraft." Don't become part of the 8.3% of Americans that overdraft more than 10 times per year and opt out this service.
4. Fancy Checks
Do you really need to spend between $21.95 to $56.85 (before applicable taxes, shipping charges, and extras) for Little Mermaid checks? No, you don't.
Generally, ordering a check through your own bank is not a good idea. For example, ordering personal checks at Sam's Club starts at $8.70, while ordering checks through your bank often starts at $20. The only time to order checks through your bank is when they are free, such as when opening a new account.
5. Credit Reports
You don't need to pay for a credit report. Ever.
Under federal law, you can get a free credit report through AnnualCreditReport.com every 12 months. This report includes all your credit history from the three main reporting agencies: Equifax, Experian, and TransUnion.
It is a smart habit to order your free credit report every year so that you can go through it to find any inconsistencies. If you do find any issues, you can create an online dispute. Notice that you only need to notify one reporting agency because it will notify the other two for you.
6. Extra 0.25% to 1.00% in Loan Interest
Several financial institutions are willing to knock off from 0.25% to 1.00% of your interest rate if you set up an automatic monthly payment from your checking account. While this is not strictly a fee, the effect of this policy is to charge account-holders who do not opt for automatic payments a fee.
- Get up to 1.00% off from the APR of your auto loan at the Fiscal Credit Union.
- Receive a 0.25% to 0.50% interest rate reduction from your student loans.
Make sure to double check with your bank if they offer rate discounts for automatic monthly payments.
What are other banking and finance fees that you don't really have to pay?
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