There have been significant changes in the banking industry over the past year, which can have a major impact on your wallet. One of the keys to managing fees is paying close attention to communications from your financial institution and to your account. Below are some tips to help you be prepared and manage your money more carefully.
Types of Fees and Penalties
Monthly Account Fees – Many checking and savings accounts that used to be free now have monthly service fees. Watch your statement for new fee terms such as “monthly service fees,” “monthly service charges,” “account maintenance fees” or other similar terms. The cost of these fees vary at different financial institutions from $3 a month (for high school or college student accounts) to an average range of $8 to $15 a month, and as high as $30 a month depending on the type of account(s).
It is still possible to avoid monthly fees and continue to enjoy a free checking account; however, now you have to earn it. Each financial institution has a different set of criteria for qualifying for free checking. Some offer a “menu” of options and may require you to have one or more of these options in place, such as direct deposit, automatic deductions, recurring auto transfer (often to savings accounts) or a specific daily balance.
Other financial institutions may require only one of those options such as:
Direct Deposit – Often with a minimum of $500 a month.
Daily Balance Amount – Amounts can range from $300 to $1,500 per account or a daily balance of $5,000 total for combined accounts. These can be tricky. Just one 24-hour-period of dipping below the balance may cost you that monthly fee.
Recurring Automatic Transfers – These required transfer amounts to savings can vary from a daily $1, to a monthly amount of $25, or as high as $250.
High school or college students can often avoid the monthly fee if their checking account is linked to a parent/guardian account, or if they have direct deposit.
Transfer Fees – Now that online banking is so convenient, it’s easy to transfer funds from one account to the other on the spot to prevent an overdraft situation. Find out your financial institution’s policy on transfers so you know how many transfers are allowed between the different accounts each month, and how much the transfer fee will be if you go over that limit.
Overdraft Protection Fees – All financial institutions are now required to get an opt-in from their customers before enrolling them in courtesy overdraft protection for debit cards and ATM transactions. This means if there is not enough money in the account, your debit card will simply be declined at the register or ATM, saving you hefty fees and keeping you from going over budget. However, keep in mind, paper checks are another issue. The average overdraft fee (nonsufficient funds fee) set a record in 2011 at $30.83.
ATM Fees – Stay alert to non-bank ATM withdrawal fees. A common fee for using an ATM that does not belong to your financial institution is $3. And, you may be charged fees by both the ATM provider and your financial institution. Multiply those fees with numerous weekly withdrawals and the amount can really add up. But, by planning ahead for cash needs and knowing where to find your institution’s ATM locations, you can avoid this fee all together.
Debit Card Accounts – Be on the alert for future maintenance fees. There may be point-of-sale fees, monthly fees or yearly fees for carrying a debit card. Be sure to scrutinize your account statements.
How to Save
Go Green – Set up paperless statements.
Go Virtual – Bank online and use only ATMs instead of going to bank tellers.
Go Mobile – Most financial institutions now offer “alerts” for your mobile devices where you can set up specific “Low Balance Alerts,” “Recent Activity Alerts,” “Upcoming Scheduled Bill Payment Alerts,” “Online Direct Deposit Alerts” and much more so you can monitor your available balances and stay on top of your account. These alerts can be set for email or text messages. Be sure to check with your wireless carriers for any fees or charges that could apply in your state. Your responsibility is still to click and read the fine print.
Go to Customer Service – There may be times when your balance briefly dips, or some unusual activity causes a monthly fee. If you have been a long-term customer in good standing and you speak with a customer service representative, your financial institution may waive those fees. It’s always worth asking.
Go Shopping – Competition is still stiff in the banking industry and cheaper checking accounts are available. Research better rates and reduced fees at community banks, credit unions or online banks. You also may be able to negotiate for a better deal with your current financial institution by letting them know you are planning to close out your account and move your funds to another financial institution.
Take the time to research, read, ask questions and stay on top of your accounts to save money, time and energy.
Judy Lawrence is the author of “The Budget Kit” (now entering its 4th decade – with more than 425,000 copies sold) and founder of www.MoneyTracker.com. Her Financial Counseling private practice is in Albuquerque, NM where she conducts workshops and often meets with clients in their homes. Judy coaches and counsels by phone nationwide and internationally and can be reached at firstname.lastname@example.org.