When finances are tight, one way to free up some extra cash is by avoiding fees when possible. Fees are a small, fixed charge that consumers pay for a privilege or service.
Bank fees tend to be the fees that people gripe about the most. There are transfer fees, overdraft fees, checking account fees and a host of other small charges that can amount to a serious chunk of cash over the course of a year. What many people fail to realize is that most of these bank fees can be avoided. All it takes is a little diligence and an awareness of what conditions trigger a bank fee in the first place.
1.ATM fees. Your bank’s Automatic Teller Machines (ATMs) are always free to their customers. It’s when you use another bank’s ATM that those $3 fees are charged. To avoid ATM fees, withdraw cash from one of your bank’s ATMs instead of using the one at the movies or amusement park.
2.Overdraft fees. When a check bounces, banks charge a hefty fee to return the check to the issuing bank. Bounced check fees run upwards of $39 or more and can empty out your checking account in no time at all. To avoid overdraft fees, always keep a close eye on your remaining balance. An overdraft protection plan can also help prevent overdraft fees from happening in the first place.
3. Service fee. Does your checking or savings account show a “service fee” of $5-10 dollars every month? Service fees are the cost of having a bank account, however, most banks will waive this fee if a minimum balance is maintained. When opening a new account, be sure to ask about the minimal balance required to avoid paying this monthly service fee.
4. Transfer fees. Some banks will charge transfer fees when customers transfer funds from savings or a cash reserve account to their checking account. At my bank, the first three online transfers are free, but the ones that follow cost $1 per transaction. These fees can also be avoided by staying under the limit allowed.
5. Late Fees. These occur when a bank credit card or mortgage payment is paid after the due date. While bank-held mortgages may allow a five-day grace period before attaching a late fee, credit card companies aren’t so accommodating. To avoid late fees, mail in your payments early or set up a bill pay plan to make the payment automatically.
6. Loan Origination Fees. These are the cost of taking out a loan for a home. These fees are one percent of the total value of a loan and usually aren’t negotiable. However, when times are tough, a little comparative shopping never hurts. Banks who are aggressively pursuing your business may waive loan origination fees and offer additional perks as well. Our family switched to a nationally known bank several years ago when they waived the loan origination fee on our mortgage and offered free checks and checking, a free safe deposit box and free travelers’ checks for a total of $3,500 in savings.
All banks charge fees; there’s no way around that. However, you can avoid most of these fees by always paying attention to your balances and asking plenty of questions when taking out a new loan or opening a new checking account.