Every budget is tight and the last thing you need is to be paying unnecessary banking fees to make it even tighter.
No matter how small the fees are, they can really start to add up.
And bank fees always have that pesky habit of hitting you when you can least afford, don’t they?
Well, let’s put an end to that.
Below we will go through in detail what bank fees you should be looking out for and how you can avoid them.
Let’s take a look.
Things Have Changed In The Banking World
There are many bank fees that plague any bank account. Your account is charged a fee if you overdraw, you are charged a fee for depositing a check that bounces, your account is charged a fee if you use another bank’s ATM, another charge if you’re making too many transactions, and another if you aren’t making any transactions at all.
It’s gotten out of hand!
In fact, a study conducted by WalletHub found that the average bank account has around 30 different fees that can be charged to it. And worse, 1 out of 5 banks don’t even outline these fees and charges on their website. So, you may not even know when you open a new account what you’re getting yourself into.
What’s that you say?
You might as well keep your money in cash under your mattress or pillow.
I’d nearly have to agree with you. However, it hasn’t quite gotten to that extreme just yet. If you’re smart and thorough enough, it’s quite possible to avoid most banking fees or at the very least keep them to an absolute minimum.
Pro tip: A very handy tool to use when trying to keep on top of your bank fees and watch your overall budget is to use an app like Emma. Emma is a budgeting app and money management assistant that will help you find and avoid those pesky bank fees that everybody hates. I mean we all need a helping hand sometimes, don’t we?
Sure we do.
Ok, so what are some of the most common bank fees and how do you avoid them?
Read on to find out.
1. Overdraft Fees
Let’s say you go down the street for a few quick items. Some milk, eggs, butter, whatever it may be, you don’t think about the cost too much as it’s not going to be an expensive trip.
You shop comes to $20, a very manageable cost.
Has this ever happened to you though?
You’ve got automatic withdrawals that come out of your account. A utility bill, your Netflix and Spotify subscriptions, or a transfer between your everyday account to a savings account.
It can be really easy to lose track of the exact balance of your bank account.
So, you pay for your groceries but you only have $15 in your account. That’s cool, your overdraft is there for that reason, right?
Sure, but overdraft fees can be expensive!
And sometimes that $20 shop just turned into a $30 shop by the time you paid the overdraft fee and the interest. In fact, the Consumer Financial Protection Bureau found that the median overdraft fee was $34!
That’s a huge amount of money for simply having overdrawn your account.
So, how do you avoid this?
It seems obvious right, just don’t overdraw your account. Sometimes, as we mentioned above, it isn’t so simple. Here are a few tips to avoid these hefty fees:
- Choose not to opt into overdraft protection. When setting up a new account, bank’s will often ask if you’d like to opt into an overdraft protection option. Simply say no, overdraft protection sounds like it will help you avoid fees but in fact, it is set up to do the exact opposite. Therefore, it’s a wise move to avoid them altogether.
- Keep a close eye on your account’s balance. I know it sucks having to continually check your balance all the time, but it’s really a good way to know where you’re at before you make any purchases. A simple glance at your phone banking app while standing in line to buy something could save you a pretty penny. Sometimes, it’s as easy as transferring a small amount from another account to avoid any overdrawing fees.
- Set up cellphone app alerts. You can set up apps that will send you notifications or texts when your account has gone into overdraft. That way, you can transfer money from elsewhere while the transaction is still pending and avoid the overdraft fee. Emma is a great app for this, she’ll send you a notification when your account is in overdraft. That way you’ll never pay another overdraft fee ever again.
2. Overseas Transaction Fees
When your abroad it can be almost impossible to avoid overseas transaction fees, whether it be at an ATM or payment terminal. Before ATM credit cards and debit cards, travellers once had to carry cash with them everywhere they went. And this obviously comes with its own risks and inconveniences.
So, banks cards have basically eliminated these inconveniences and risks, however, this has come at a cost. In the form of, you guessed it, a big old account fee.
Every time you use your card abroad, a fee is charged to your account to convert your dollars into local currency. Most banks charge a flat fee of between $1.50-5 for foreign withdrawals or transactions. These transactions may also be subjected to an additional fee of 1-3% of the total amount of the transaction depending on who you bank with.
This is where doing a little research before heading off is a great idea.
Several American banks do not charge foreign transaction fees. While others have partnerships with other foreign banks and will help you avoid any more expensive foreign banking fees.
And, some credit cards from specific banks don’t charge fees when you spend your money overseas.
The best strategy is to simply plan ahead and be smart about who you bank with.
3. Maintenance Fees
Banking maintenance fees seem pretty ridiculous, right?
I mean banks want you to keep your money with them so they can loan it out to other customers and make a profit off the interest they charge.
However, now that interest rates are so low, banks aren’t making as much money from doing this. So, instead, they are tacking additional fees onto anything they can.
Maintenance fees are one of these fees.
And they aren’t to be ignored, maintenance fees will add up quickly. Money Rates found that the average monthly maintenance fee in America is $13.47 per month, that’s $161.64 a year!
So, how do you avoid these exorbitant fees?
By following these steps:
- Maintain a minimum balance. Many banks will waive your monthly maintenance fee as long as you keep a specified minimum within the account.
- Meet direct deposit requirements. Many banks will waive your monthly maintenance fees if you make a certain number of direct deposits out of your account each month.
- Meet transaction requirements. Using your debit card to make a specified number of transactions during the month may also help you avoid maintenance fees with some banks.
- Use a student account. If you’re studying, track down a student account. Most student accounts don’t charge any maintenance fees.
The Wrap Up
Avoiding pesky bank account fees isn’t easy sometimes. And it can be really hard to keep on top of.
Why not use the help of Emma?
Emma believes that everyone should have the ability to avoid expensive banking fees. She will notify you when your account balance is in the risk of overdrawing, highlight any areas of your budget that could do with improvement, and will help you take control of your finances in an easy and productive manner.
Leave Emma in charge. She’ll help take the stress out of banking.