Beware of Financial Institution Fees

Many of us have had the experience of going to our financial institution for a routine transaction and then finding there is a fee for it.

Fees charged by financial institutions are increasing as this type of income becomes more important to banks. According to Bankrate.com, over 50% of bank income now comes from fees. For example, the average overdraft fee is now $28.95 per item. Here are some fees to be aware of:

Overdraft fees. This is the charge you get if you overdraw your checking account. This fee also applies if you overdraw your account with your debit card.
Checking fees. These are charges like monthly service charges, fees for depositing coins, minimum balance fees, or transaction fees.
Account closing fees. This is a fee charged if you close an account soon after you opened it – usually within 90 days but sometimes as long as six months.
Credit card fees. This could be a topic on its own. There are many fees and charges associated with credit cards.

Deposit returned fee. If you deposit a check that bounces, your bank will charge you to return it.
Teller or inquiry fees. Some banks charge you if you use a teller, or if you make too many telephone inquiries.
ATM fees. ATM’s provide a whole new world of fee opportunities for banks. You can be charged for frequent withdrawals, too many inquiries, and using another financial institution’s ATM.

There are some things you can do to avoid financial institution fees. It will take some work, but the effort is usually worth it when you look at the money you will save.

The first and most important thing to do is just be aware of your financial institution’s fees and change your habits to avoid them. For example, if your financial institution charges for telephone inquiries, go online and get your account information from their website.
If you are charged a fee, simply ask the financial institution to waive it. You would be surprised how often this works. This can be especially effective if the fee is for something that happens infrequently, such as a one-time overdraft or a one-time service fee. If you frequently overdraw your account, you are less likely to get your fees waived.

Do your research. If you think your financial institution is “fee happy” shop around. You should consider smaller, local banks, online banks, and credit unions. Make sure you completely understand the financial institution’s fee policies and then make sure you can avoid them.
Get some type of overdraft protection to avoid returned check fees. Financial institutions usually offer some type of line of credit or transfer from savings to cover overdrafts. While these services aren’t free, they are much cheaper than overdraft fees. This is especially important if you are a debit card user. Debit cards can be a wonderful convenience, but many people forget to subtract the transaction amount from their checking account after they use it. Financial institutions frequently pay debit card transactions but then charge an overdraft fee. This can be a real problem if you use your debit card for frequent, small transactions – each transaction will cause an overdraft fee.

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