5 tips for avoiding new bank charges
October 05, 2011
These days, it may seem like your bank is constantly finding new ways to charge you. Even the best banks are now looking for new--or old--ways of reclaiming money from your accounts and investments, whether it's from lowering interest rates on savings and money market accounts, or charging maintenance fees on checking accounts.
Regulatory changes--including caps that go into effect Oct. 1 on the swipe fees banks charge retailers when you buy something with your debit card--have forced their hand, banks say. The maximum fees banks can charge stores is less than half of what they used to charge on average, and that's expected to cost banks about $10 billion a year.
As a result, many banks are rolling out or considering monthly fees on checking accounts, fees for debit card use, higher ATM fees and higher overdraft fees. Some banks that introduced these and other fees in recent months are already increasing some of the fees. Such things as interest checking and debit card rewards have all but disappeared.
Not only is the number of free checking accounts dwindling, but the fees charged are increasing in many cases too. According to the Associated Press, the average cost of using an out-of-network ATM has also increased, along with the average overdraft fee. The interest rates being paid on interest-bearing checking accounts aren't going up, but the minimum balance you need to maintain in order to avoid fees is climbing.
With all these changes and charges, it pays to follow these five rules for avoiding bank charges:
1. Don't become too reliant on your debit card
Although USA Today reports that debit card fees are still rare--so far only four perecent of banks charge a debit card fee--Wells Fargo, Bank of America and JPMorgan Chase are testing monthly fees, which means other big banks may soon follow suit.
A good alternative to your trusty debit card could be your credit card--but only if you are paying off the balance every month. The nice thing about debit cards is that the money you spend is deducted quickly from your checking account. Not so with a credit card, so be careful not to rack up more debt than you can pay off in a month.
2. Understand the cost of overdraft charges
Although consumers benefited from rules preventing banks from automatically charging you for overdrafts, many customers continue to rack up big fees. Avoid this by paying careful attention to your account and balancing your checkbook regularly.
3. Embrace direct deposit
Employers and governments like direct deposit because it saves them the cost of cutting checks and mailing them. Banks like them because they feel more secure in their relationship with you. So use it. Chances are good that your bank will waive your monthly checking account fee if you have a direct deposit.
4. Shop for ATMs
If debit card fees become more commonplace, people are going to start either writing checks or pulling cash out of ATMS in order to purchase stuff. But those ATM charges can add up, so try the various smartphone GPS apps that allow you to find in-network ATMs that are nearby.
5. Move to a community bank or credit union
In many cases, bigger banks equal bigger fees. So look for a small community bank or credit union that doesn't charge for checking accounts or debit cards. You may not have access to that huge ATM network, but if you're still able to use your debit card for free, who needs cash? Plus, many credit unions offer superior interest rates on savings accounts too.
The rules are changing so fast that it's gotten to where you need to read everything that comes in the mail from your bank. So make that a final rule: be diligent and pay attention to what your bank is up to. And if you don't like it, move to another bank.
