The clamor against seemingly unreasonable bank fees and charges has created such deafening noise that it’s carried itself all the way to the ears of people in power, thus spawning a number of measures designed to protect consumers. But before the ink dries on these bills or before they are even passed in legislation, some banks have already realized how much they stand to lose — and more importantly, are taking steps to recoup their possible losses.
With deposit interest rates at their lowest levels at this time, a new round of fees or an increase in fee rates could spell doom for most people’s bank accounts if they are not careful. In fact, it can even stick your savings with a negative rate.
So how do you make sure that these charges don’t eat up what meager interest you earn or dig into your principal funds? Simple. Be in the know. While you can do little to actually stop banks from charging more fees, you can protect your own account from being “sneaked up on” by these often hidden or unannounced charges.
- Overdraft Fees – Overdrafts these days cost at least $30, and that’s for each occurrence of an overdraft check. If you don’t keep tabs on your check issuances you could easily run up more than a hundred dollars in total overdraft fees in a day, even if your account balance only dips a few dollars into the negative, because banks usually process checks with the largest amounts first.
- Overdraft Protection – You could of course, always do away with overdraft charges when you sign up for overdraft protection where the bank effectively provides you with an “instant” loan when you issue an unfunded check. This could cost you much less than a per check overdraft fee, with annual fees usually around $10 to $30. But people who often need overdraft protection are those who maintain low balances on their accounts, and in that case a $30 cost, on an account that maintains only a $300 balance, would still be a 10% negative interest.
- Maintenance Fees – You may think that banks are happy simply to have your business, but the truth is many banks charge a fee for you to maintain an account with them. The fees can range anywhere from $6 to $8, which may not sound all that much per month, but can actually add up to a hefty sum on a yearly basis. If you’re keeping only a few hundred dollars on the account, the sum would definitely be much less than the savings yield you’re getting.
- ATM Fees – ATM fees may only cost you a buck or two per withdrawal, but these can also add up in a month if you don’t watch your transactions. If you use an ATM outside your bank’s network, you could be slapped by fees both by your bank and the bank to which the ATM belongs to. And take note of changes; the fees aren’t getting any lower.
- Paper Fees – Going green has perks that go way beyond the environmental benefits. Used or canceled checks are now saved as digital images and for many, this is fine. However, when the time comes that you may need a copy of your check for tax purposes for instance, you’d have to pay for it. The same holds true for bank statements and other paper documents. The good news is, most banks only charge when you request a copy of an old check or statement. If you request for your checks to be delivered with your paper statement on a monthly basis, you’ll get both free of charge.
- Returned Checks – Are you aware that you could still get charged through no fault of your own? Yes, some banks do charge the depositor’s account when a check deposited gets returned. The lesson here? Only accept check payments from persons or organizations that you trust.
- Closing Account Fees – If your bank fees get really bad and you want out after only a few months, don’t expect them to make it easy for you. For the brief period they have served you, and for closing an account, whether it’s less than 90 or 180 days, you may need to pay a small fee.
If you simply let bank fees drain up your account balance bit by bit, you would have been better off just stashing your cash under the mattress. That way, you would at least end up with the same amount that you started with. While you should keep an eye our for the ways banks can grow your money, you have to also be wary of the ways that they take it away.