How to avoid high bank charges?

How to avoid high bank fees?

More than a third of the bank's borrowers struggle to pay their debts on time. Added to this debt are the costs of various banking services. To do this, you need to closely monitor your bank accounts to avoid unnecessary charges. In fact, a handful of bank charges could push you into unmanageable debt levels.

Although these bank charges seem small, they can certainly add up over time. Fortunately, it's easy to avoid or reduce these sometimes high fees if you have some knowledge in advance.

I assume that now you are faced with a situation where you pay colossal bank charges to your bank. If so, worry no more. In this article, I show you the most common bank charges and how you can avoid them. This method will save you hundreds of dollars over the years.

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???? The 8 Most Known Bank Fees

If you regularly see charges deducted from your checking account, know that you are not alone. Me too a few years ago when I opened my first bank account I had the same problem.

According to a 2017 study by the US Federal Reserve, bank checking account holders pay around $250 per year in fees. However, you should know that you are not obligated to pay them, although they are common fees.

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Before telling you how to avoid or reduce your bank charges, let's first introduce them.

➤ Monthly maintenance/service fees

Many banks charge you a monthly fee for keeping your money in an account with them. The amount of these maintenance fees depends on your bank, but you can pay up to $15 per month for an unpaid checking account.

All told, you'll pay a total amount of about $180 per year.

Including monthly maintenance fees in your checking accounts is a way for banks to both directly increase revenue through fees and encourage consumers to keep more money in the bank. But how can you avoid or reduce these maintenance costs?

How to avoid account maintenance fees?

It's usually easy to avoid checking account maintenance fees. Holders of this type of account can open both a checking account and Saving account at the same bank or by maintaining a minimum balance in your account. Sometimes setting up a monthly direct deposit system is enough to waive the monthly maintenance fee.

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In addition, many banks that charge monthly maintenance fees specify that these fees will be waived each month the consumer complies with certain guidelines. These guidelines may include:

  • Maintaining a minimum daily balance in the account
  • The establishment of a system of recurring direct deposits
  • The use of the debit card associated with a minimum of times per month

Knowing these guidelines for availing this monthly fee waiver, you can avoid paying account maintenance fees.

Also, if you regularly meet the requirements to avoid the fee, you may be able to call and ask for a waiver if there's a month where your daily balance slips or you neglect to use your debit card.

➤ ATM fees

If you feel like you're paying more for the convenience of using ATMs outside of your bank network year after year then you're absolutely right.

ATM fees from your bank and the ATM operator can add up when you often withdraw cash.

Large brick-and-mortar banks charge customers an average of $2,50 for using an out-of-network ATM. However, the use of ATMs is optional. It's ultimately up to you to decide whether the convenience of using an ATM is worth it.

I found that over time the ATM fees for my various accounts kept increasing. This may be the case with you too. you should know that this trend is expected to continue because there are certain factors behind this.

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It all started with the rise of peer-to-peer payment applications which have considerably reduced the use of ATMs. This drop in demand for ATMs makes them very expensive for banks to maintain.

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The increase in ATM user fees therefore compensates for the reduction in the volume of transactions at ATMs.

Additionally, banks see ATM surcharges as a relatively safe way to maintain or increase their profits without alienating their customers. But how to finish once and for all with fresh?

How to avoid ATM fees?

Like account maintenance fees, ATM fees can be avoided. In fact, the good news is that ATM fees are among the easiest to avoid or reduce.

What you should first know is that the use of ATMs is optional, it is up to you to judge the need for its use. Next, you need to identify the ATMs of your bank network in your area so that you always know where to find cash if you need it.

Fortunately, many banks offer ATM locators in their mobile apps. Finally, you can only use ATMs in your bank's network, which can usually be found on their website.

bank charges 1
High bank charges

If you need cash right away and the only ATM options available will charge you a fee, consider using your debit card for a small purchase and requesting cash back instead.

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Article to read: The particularities of Islamic banks

Many stores don't charge cashback fees, making it an almost free way to access your money. That's all I can tell you for now about limiting your ATM fees

➤ Bank overdraft fees

Before first these fees, it is important to know what is le overdraft. Well, the bank overdraft mainly corresponds to the "authorized overdraft", the amount and date of which are contractually fixed in the account agreement, which specifies whether or not an authorized overdraft is possible.

It is the margin that your bank can grant you when you wish to carry out an operation whose amount is greater than what you actually have in your account. From this definition the overdraft is assimilated to a loan and is therefore not free. It is not a fee and must be submitted to your bank for approval.

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However, overspending on your account is the kind of mistake anyone can make. In reality, we all tend to keep our checking account balances in our heads, so it's easy to forget.

You could then make a $50 purchase with your credit card, not realizing that your account only contains $35.

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In practice, banks often allow the purchase to go through in this case, rather than refuse payment. You might be spared the momentary embarrassment of having your payment declined, but your account goes red.

It is at this precise moment that your bank will charge you the overdraft fee. But, how to avoid them? Here is the solution to your problem.

How to avoid bank overdraft fees?

Overdraft on your bank account is an easy accident to avoid. The first thing to do to avoid overdraft fees is to sign up for a direct deposit system. This solution also allows you to avoid the costs associated with the use of ATMs.

This system will allow the money to be systematically and automatically paid into your account. It will also help you maintain a minimum required balance for your account and avoid overdrafts.

Many banks also offer overdraft coverage or protection for an average fee of up to $35 per overdraft.

Because instead of being declined for a purchase when you don't have enough money in your bank account, the bank will cover you by taking the funds from your linked savings account, second checking account, line of credit , etc.

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Since transfers between linked accounts happen instantly, having a savings account that you can transfer money from when you realize your balance is getting low will also help you avoid overdrafts.

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Finally, the best way to avoid overdraft fees is to keep an eye on your account balance. To do this, you can easily sign up for balance alerts via email or SMS from your bank.

You can configure these alerts to be notified when your balance drops below a threshold you choose.

➤ Bank statement fees: paper version

The bank statement is a summary of all the financial transactions that took place on an account managed by a bank during a certain period. Before, receiving a monthly statement in the mail was the only way to get details of transactions in one's bank account.

These days, your bank statements are emailed or made available to you on the banking app or website. These services allow you to access all your banking information 24/24.

However, some customers still prefer to receive paper statements in their mailbox rather than in their e-mail box. Unfortunately, some banks charge a fee for printing and mailing bank statements to their customers.

These fees vary depending on where you bank and the number of pages to print.

How do I avoid paper bank statement fees?

To avoid these fees, simply sign up for paperless or online banking. In reality, there is no way to receive paper statements for free, unless your bank charges for one.

➤ Account inactivity fees

Another thing that many account holders don't know is that some accounts incur charges for inactivity. If an account has been inactive for a certain period, the bank can no longer levy any charges on the account.

Not only do these dormant accounts cause administrative headaches for banks, but they can also cost them dearly. Banks levy inactivity fees on these accounts at this time in order to encourage holders to become active again. These fees generally vary between $10 and $20 per month.

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Banks can start charging inactivity fees after the account has been completely inactive for at least six months. Some banks wait up to a year to start charging these fees.

You may or may not receive notice that the bank will begin charging the monthly fee. If this is not done, you may not realize you are paying the fee until the bank clears the account with that fee and closes the account. $0 balance account. Here's how to avoid these fees.

How to avoid account inactivity fees?

To avoid charges related to the inactivity of YOUR account, two solutions are available to you. Setting up a deposit or recurring payment system can help you keep activity to a minimum.

Otherwise, you can just close the account and transfer the money to an account you are more likely to keep track of.

➤ Excessive transaction fees

Excess transaction fees arise when savings account holders withdraw beyond the expected limit. In the USA for example, this limit is six free withdrawals and transfers per month. But, with the coronavirus outbreak currently circulating in 2021, that limit is lifted.

How to avoid excessive transaction fees?

Excessive transaction fees can range from $3 to $25 per transaction, but this can easily be avoided if you use your checking account as a daily account for routine withdrawals, like paying bills.

In any case, it is necessary to know the differences that exist between all these accounts. Check out our article on what kind of bank account can i create to learn more about the different types of accounts.

➤ Bank transfer fees

What you need to know is that a bank transfer is a transfer of money that can be made between two accounts that may or may not be open in the same bank. Bank transfers can be a quick way to transfer money without using physical cash.

But, you have to pay for this convenience. For this service, banks usually charge between $16 and $35 for domestic and international transfers.

How to avoid bank transfer fees?

To avoid this kind of fee, you must use electronic transfers, but sparingly. This method actually does not allow you to avoid but earlier to reduce. Unless it is an official transaction that requires a large sum of money. Alternatively, you can transfer funds online or through your bank's mobile app.

➤ Costs related to the use of a bank card

Credit card fees differ not only from card to card, but also from bank to bank for the same card choice. These costs may be related to annual subscriptions, withdrawals, operations outside monetary zones, theft of the card or even the reissue of the password.

Among these fees, some are free depending on the banks. Remember to consult the pricing conditions of your bank so as not to have any unpleasant surprises!

How to avoid or reduce credit card fees?

Choosing the right bank card is essential, especially since the rates vary greatly from one bank to another. Limiting credit card fees is easy, provided you take certain points into account! Check out our guide to How to choose your bank card?

Bank charges
Bank charges

To choose your bank card, you must:

Consider your needs: No need to pay extra credit card fees for services you don't need!

Take into account your banking habits: choose a card corresponding to your habits. There is no point in taking out credit card options such as foreign travel insurance if you never travel outside your home country!

Prefer an online bank: the credit card fees charged by online banks are often much less expensive than those of traditional banks.

???? Summary …

In this article, I do not claim to be able to allow you to avoid all bank charges. In fact, bank charges will never completely disappear. You just have the ability to avoid the majority of these fees that come your way.

Just keep from good management habits from your bank account. Keep an eye on your balance and regularly check your account online to avoid billing errors. And, if you feel like you can't avoid your current bank's fees, don't be afraid to find another bank that's right for you.

See our article on Understand the bank to better invest so you know how to choose a bank that's right for you.

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