Bank fees can add up quickly, potentially emptying your account before you are even aware of a problem. Bank charges include overdraft fees, service fees, ATM usage fees, cash advance fees and interest. It is important to fully understand the terms of your bank account, shop around and monitor your accounts regularly. These simple steps can help you prevent excessive bank charges and protect your credit rating at the same time.
Monitor your accounts
If your bank requires a minimum balance, it is critical that you do not go below that amount or you will incur a variety of charges. Many people avoid this problem by deducting the minimum balance requirement from their check register, so the balance shown is the available, rather than actual, balance. Reconciling your check register with the monthly statement is another good way of avoiding excessive bank charges.
Do not overextend yourself financially
One sure way to avoid excessive bank fees is to live within your means. This means not spending more than you have or incurring more debt than you can handle. In the case of overextended credit card debt or lines of credit, you may be charged a cash advance fee, an over limit penalty and interest on that penalty. All these charges are added to your already overextended line of credit, creating a self-perpetuating financial crisis.
Invest in protection
Overdraft protection is useful when you know you are facing difficult financial times or a major purchase, such as a home. Overdraft protection provides insurance against many excessive bank fees. For individuals who have a firm grasp on their finances, overdraft protection is nothing more than an additional fee. If possible, link a savings account to your checking account to act as a buffer against possible insufficient funds.
Shop around
If your bank charges you a fee to use an ATM, you may want to switch banks. These fees may not seem excessive at the time, but the national average fee of $2.10 can go as high as $5, resulting in $1,825 in a single year of daily use, simply to access your own money. Banks, like other businesses, must compete for your business. That competition frequently takes the form of reduced or eliminated monthly fees, higher interest rates on your savings, or free checking writing privileges. If your bank charges excessive fees, find another bank.
If it looks too good to be true…
Banks and credit card companies frequently send out offers of cash advances that sound too good to be true. The reality is that there is usually a 3% cash advance fee, even when the interest rate offered is lower than average. This fee is added to the amount of money being credited and must be taken into account before you sign one of those blank checks for cash advances or balance transfers.
If you are the victim of excessive bank fees, your first step should be to talk with someone at your bank. Many managers are at liberty to reduce or refund fees – all you have to do is ask. If your bank continues to nickel and dime you into poverty, change banks immediately. It’s your money!