Thursday, June 1, 2023

How to Avoid Paying Unnecessary Banking Fees

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Stop and think about your bank for a moment. Your first thought should be that it’s a safe place to house your money. Truthfully, it is. However, simply having an account could cost you more dollars than you realize.

That’s right. Opening a bank account means you’ve opened yourself up to all kinds of fees. In many cases, you may be completely unaware they exist. Each one that applies to you equals a smaller stack of green in your account.

Fortunately, there are steps you can take to avoid unnecessary banking fees. Keep reading to see how you can sidestep these deductions while still maintaining your account.

1. Get a Fee-Free Debit Card

If you’re like millions of Americans, you could be on a tight monthly budget. In that case, you’re already watching your spending closely to make sure you don’t zero out your account. You’d probably prefer not to keep tabs on whether the bank is draining your pockets, too. That’s what happens with maintenance and overdraft fees, though. Sometimes, they occur before you know it.

These fees can range from $5 to $35, and a fee-free debit card can help you avoid them. If you set up an account with certain online banks, you can score this type of card. Such banks are different from the ones you see on the street corner. They don’t require you to keep a minimum balance to prevent unnecessary charges.

Plus, you can access your online bank account through a mobile app on your smartphone. That makes it easier to track in real time how much money you have.

2. Get Notifications for Insufficient Funds

Maybe you’ve had this happen to you. You rack up more than intended at the home improvement store, and when you pay, you don’t have enough money in your account. Your bank covers for you — and then socks you with one of those overdraft fees mentioned above.

But that’s only if you’ve opted in to your bank’s overdraft program in the first place. If you haven’t, your bank can simply decline the charge. Or if you attempt to pay your utility or credit card bill, say, it will return it unpaid. Do you know what happens then? If you guessed getting charged an insufficient funds fee of up to $35, you’d be right.

Sometimes, even checking your bank balance daily won’t be enough to know whether you can cover a purchase. Banks can process payments out of order or at any time of day. To be as safe as possible, set your mobile bank app to send you a low-balance alert. That pop-up notification can help save you money.

3. Stick With In-Network ATMs

How many times have you been out and about and needed a little cash? Maybe you’re shopping in a cash-only store. You could prefer to leave a cash tip for your favorite restaurant server. Whatever the case, you need to find an ATM ASAP. It’s not a big problem — just find the closest one and slip your card in, right?

Not so fast. If that ATM isn’t in your bank’s network, you’ll be charged a non-bank transaction fee. It might be a single dollar, but some banks can charge up to $3 or $4. Suddenly, that $20 you’re withdrawing is nearly $25. If you’re hitting the ATM frequently, that adds up.

Take a moment and pull up your bank’s mobile app. Many of them have a map feature that can locate free ATMs for you. If you’re on foot, you may have to walk a block or two out of your way. Over time, though, the savings will be worth it. You can also plan the next time you’re at your bank. Withdraw a few $20s and keep them handy.

4. Limit Withdrawals From Your Savings Account

Your savings account is your money stockpile — the account you add to every chance you get. You may not know many banks don’t let you use it the other way around so easily. It’s true, though. Many banks put a limit on the number of times you take money out of your savings each month. If you go over that cap, it could cost you $25 or more per transaction.

The fix here is easy, but it could take a little planning on your part. To stay under the transaction maximum, make sure you’re not dipping into your savings every day for small things. Do you typically pull from savings to pay bills? If so, calculate how much you need at the beginning of the month. Transfer that amount to checking and use that account for the rest of your withdrawals. Transaction crisis averted!

5. Keep Your Account Open

Not every bank will be right for you. Or maybe you’re getting transferred to a new location for work. Whatever the case, there will be times when closing your bank account makes sense. Stop for a moment before you contact the bank, though. Shutting your account down too early could cost you money.

Once you open an account, most banks require you to keep it active for 90-180 days. If you close it too soon, the bank will likely collect $25. Keeping the account open for a little longer may seem like an inconvenience, but the time will pass quickly. Set a reminder on your calendar to close the account when the time is up. In the meantime, maintain the minimum balance (if you have one) so you aren’t hit with any other fees.

Chances are, you’ve heard the joke about keeping your money in a mattress. It’s funny (and scary) for a reason. It’s not a great idea. Putting your money in the bank for safekeeping does make the most sense. That doesn’t mean you have to overpay for the convenience, though.

Whether your bank balance is large or small, keep these strategies in mind. They can help you hold on to more of your cash in the long run.

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