This post on avoiding bank fees is by Ryan Bonaparte, who has written for Add-Vodka before about common financial mistakes that young adults make. Ryan is a long-time writer and author, delving into topics including personal finance, technology, and career pursuits. He lives in the Boston area with his wife and fiercely independent cat.
In the financial journey to building wealth, there are many pitfalls to watch out for, but none as insidious as fees charged by banks for standard services.
Fees can erode any earnings that you may have accrued from investments, and in some cases faster than poor spending decisions. At least with a shopping spree, you get something in return. With bank fees, you might as well be setting your money ablaze.
Bank fees to avoid
Although by law in the United States, all fees are required to be shared with consumers when they sign up for an account, it’s still very easy to pay out lots of money before you realize how much bad habits can eat away at your hard-earned money.
Here are some types of common bank fees to look out for:
Even though more and more transactions occur via credit cards or mobile payments, sometimes cash is necessary. There are stores that only take cash, and many people find using the envelope method of budgeting (stocking envelopes with cash at the beginning of the month) as a great way to manage their finances.
But taking out your own money should never cost you money. To avoid bank fees, either use an account at a bank in your area or an internet bank that reimburses bank fees.
Account Maintenance Fees
Although most banks don’t charge customers fees for the accounts (really, it can’t cost them much to maintain an account), some banks do. Avoid working with these banks unless absolutely necessary.
If you do end up needing an account at one of these banks, do whatever it takes to avoid the maintenance fees. In some cases, it’s keeping a minimum balance. With others, it’s making a bill payment or setting up a monthly direct deposit.
Make sure to understand the requirements and set automatic transfers or payments to limit the headache and keep you from paying these ridiculous money-making fees.
Although the days of sending paper checks are long gone, some banks still charge fees for sending/receiving money from another bank, even if it’s to another of your accounts. While so many services (PayPal, Venmo, Square Cash, etc.) seem to understand that non-business related transfers should be free, not every bank has gotten the memo.
Again, try to work with banks that don’t charge these bank fees, but if you must, be prepared to do some legwork to avoid these fees.
If outbound transfers are subject to fees, but bill payments are not, make all payments from that account if possible. If your paycheck is deposited into one of these accounts but you need money in another account, work with your HR department to switch it up.
Although most of these bank fees are completely avoidable, sometimes we forget or misread something and end up with a painful fee at the end of the statement period.
All is not lost, however. If you haven’t been hit with a fee in a few months/years, often all it takes is a call to the bank and a nicely worded request to remove the fee. I’ve done this many times over the years, and rarely if ever had a fee stick.
How do you avoid bank fees?