Banks - High Fees and How to Avoid Them
Banks and credit card companies have always had a fee for just about anything. These days, they are increasing their fees whenever and however they possibly can. They are more unwilling to be lenient and less likely to waive certain fees even for their best customers. This may or may not have something to do with the turbulence in the industry, in which there have been many bank failures recently. And according to regulators, more failures are expected to occur.
Whether yours is in trouble or not, it is important to know how to protect and preserve your money from excessive fees. Remember, the banks role is not to protect your money or to help you achieve financial security and independence. To keep from being charged outrageous fees, you have to start by watching your checking account like a hawk. Otherwise, you will be charged for anything and everything.
Make sure that you always know how much money you have in your checking account. This sounds easy enough, but sometimes they will let you withdraw funds from the ATM machine even though you might not have enough money in your account. Although they could easily prevent this from happening, they would rather make the extra money from the overdraft fee.
Overdraft Fees
Overdraft fees can range from $30 to $40 whenever an account holder writes a check with insufficient funds. Your account may be subject to a number of overdraft charges due to the way they process checks. When checks are presented for payment, the check with the largest amount is usually processed first. This will increase the number of checks subject to overdraft charges. For example, assume that six of your checks are presented on the same day when your account balance is $1,400. Suppose that the largest check in the amount of $1,500 is your mortgage payment and the five others are for small amounts of less than $50. They could pay the five smaller checks and return the largest one which would cost you $30 to $40. Instead, they will most likely process the $1,500 check first causing all six checks to bounce meaning you would be charged $180 to $240. Think of the money they are making from this one little scheme. It should be illegal for them to do this to their customers. It might pay for you to inquire as to whether yours engages in this practice. And again, by knowing exactly how much you have in your account, you can avoid these outrageous fees.
To make matters worse, some will even charge you for a check written by someone else. If another person writes a check to you and the check does not clear, you may be charged a fee. Now you know why so many merchants no longer accept personal checks.
Automatic Deductions
Be extremely careful about authorizing automatic deductions from your account to pay utility bills, loan payments, credit card payments or whatever. This is very dangerous and you could be charged hundreds of dollars in fees if something happened to you. Anything can happen. Anyone could be involved in an accident, disabled or hospitalized for a period of days or even weeks. While in the hospital, automatic withdrawals for bill and loan payments continue. If no one is available to take care of the banking and with no way to make deposits or transfer funds, the fees for insufficient funds can add up to a pretty hefty sum. Even after an emergency resulting in excessive fees, banks are not likely to have any mercy.
Transaction Fees
Watch out for transaction fees. Before you ask anyone to do anything, ask if there is a fee. Frequently, services that are “free” elsewhere from another merchant or retailer will cost you something at the bank. You may not be aware of these charges unless you ask or until you receive your next statement. For example, if you ask to have a payment stopped on behalf of a disabled account holder as in the previous example, the bank will most likely charge a fee of $30 to $40.
To be on the safe side, ask about anything including whether
they have a fee for teller visits and telephone calls. Some charge a
fee each time a customer visits a teller or each time they talk to a
representative over the telephone. If yours charges for this, maybe
it’s time to switch.
Return from Banks to Financial Planning