Avoiding Checking Account Fees
January 25, 2009
According to the US Government Accountability Office, in 2006, consumers paid over $36 billion in various fees associated with checking and savings accounts at depository institutions--banks, thrifts, and credit unions. But if you align your checking account with your financial habits, then you can reduce your contribution to that huge amount. Here are some common checking account fees, along with some suggestions for avoiding or at least reducing them:
Overdraft Checking Account Fees
The best way to avoid overdraft fees, obviously, is to not overdraw your checking account. But beyond that, you can also choose to purchase overdraft insurance, so that if an overdraft does occur, you are not charged such a high penalty.
Minimum Balance Checking Account Fees
Many banks offer free checking if your balance is above a certain minimum, but they charge checking account fees if you don't meet that limit. To avoid this fee, either keep your checking account balance above the minimum balance or find a bank that doesn't charge this fee.
There are many banks that don't charge a minimum balance checking account fee.
Online Checking Account Fees, or Lack Thereof
Online checking accounts allow banks to keep more transactions purely electronic. That's cheaper for them than paying a teller to talk to you. The bank is often able to pass this cost savings on to the customer in the form of a free checking account.
Direct Deposit
Setting up direct deposit of your paycheck, pension, or Social Security benefit into your checking account tells a bank that you're committed to it. You're more likely to be a loyal customer than people who have not involved the bank so intimately in their income cycles.
The bank may cut you a break on checking account fees, since you're so committed.
Rewards for Good Behavior
If you're the sort of person who is NEVER overdrawn, conducts lots of transactions, and ALWAYS maintains a healthy credit balance in a checking account, you should open a rewards checking account. This is often an online facility, and pays very attractive interest rates. However, if you do ever slip up--even if it's only once and very briefly-- then you can expect to be heavily penalized.
For the Less-than-perfect
For those who have given up trying to be a perfect customer, shopping around is equally important. Banks are generally unforgiving when their rules are breached, but some impose tougher penalties than others. If you think it's likely that you'll slip up, look for an account with lower penalties. However, expect to receive little or no interest.
Smart checking
- Put $100 in your account as a buffer--then pretend it's not there.
- Banks don't shout about changes to rates and terms. Make sure you're still getting the best possible deal.
- Look at Your Monthly Statement and see what fees are being charged. Some banks think you won't look at your monthly statement. When you do, you may be surprised.
- Don't just accept a bank charge that you think is unfair. Fight your corner. You may want to call your bank and convey to them that if they want to charge you so many checking account fees, you're prepared to take your business elsewhere.
Checking Accounts for seniors
From the bank's perspective, senior citizens are some of the best bank customers out there, especially when it comes to checking accounts. By and large, they're loyal and responsible--and they often carry larger balances than younger people.
Some banks try to attract seniors by offering special deals that may include:
- Free checking
- Overdraft protection insurance
- Free debit card
- ATM fee reimbursement
- Higher interest
As a senior, you likely have a long credit history and a strong understanding of how to perform such lost arts as balancing your checkbook. Investigate your options for turning your experience with financial products into a better deal on a checking account. You've earned it.
Check out today's best traditional and online checking account rates and get your best deal.
