Bank charges: they're pesky, pricey, and will often catch you off guard when you least expect them. Business and personal account fees can contribute to the cost of closing your bank account or impose a low account balance into the negatives.
Moreover, these are situations you don't want to find yourself in. It's not fair to you as a bank customer, especially if you have been a loyal customer to the bank for years.
The question is, what are some of the bank fees that you should look out for, and how can you avoid them?
Overdraft Fees
Banks usually levy this fee when withdrawing more than what is available. For instance, a $200 transaction on an account that holds just $100 may trigger an overdraft charge. Usually, an overdraft fee costs $35, but the total price of overdrawing can increase if the customer takes too long to restock their account.
The good news is, when you are signing up for an account, the bank will ask you whether you want an overdraft service or not. Not opting in for this service is the best way to ensure you are not penalized for having a lower balance than you thought.
Because without an overdraft system, overdrawn transactions may be declined. However, this will only work for you if you are withdrawing from ATMs. You might still be charged if you overdraw a recurring bill payment. You can also sign up for overdraft protection.
Monthly Maintenance Fees
Banks will often levy this charge to maintain your account. For instance, Chase Bank charges a $12 monthly service fee and Bank of America charges $12 per statement cycle maintenance fee.
These fees can be lowered and avoided if you meet the bank’s terms and conditions, such as automatically depositing a check every month or carrying a large balance. When shopping around for a personal account, consider whether you can meet these requirements to avoid this fee. Online banks are a good option, too, as they charge this fee less frequently.
Paper Statement Fees
It has become commonplace to be charged fees for viewing paper statements. You will part with at least $2 to $3 to receive your paper statement. The best way to lower these fees is to receive your bank statements online.
If you want a copy, consider printing it on a home printer for a lower-cost alternative. Not receiving your statement via mail is an added advantage because then you lower the risk of fraudsters stealing your personal information.
Account Closure Fees
Ideally, if you are loyal to your bank, this fee should not be an issue. But, if you are closing your account soon after opening it, say, 90 to 180 days, you might get hit with $25 fine.
This fee serves to discourage people from signing up for bank accounts solely to take advantage of new-client bonuses. To lower and possibly avoid this fee, ensure your account is open beyond the cutoff period.
Card Replacement Fees
If you want to replace your debit card before its expiry date, the bank might charge you a fee. The fee varies between $5 to $25 depending on which bank you are with.
To lower this fee might be tricky because, if your card gets stolen, there is nothing much you can do about it. Instead, keep a backup credit or debit card to save on shipping.
Returned Item Fees
Just like with overdraft fees, this fee comes about when your account has insufficient funds to support your transaction and has to “return the item”.
You will be charged about $35 for each returned item. To avoid this, keep tabs with your checking balance before you make any transaction. You can also set-up balance alerts on your mobile banking app.
Conclusion
Before settling on a specific account, ensure you fully understand the terms and conditions. Look beyond a banking name or branding, and instead consider the real-deal factors that will make your banking life smooth.
