Bank fees are often small charges at the bottom of your monthly bank statement. While they aren’t substantial losses, they can add up over time and chew away at your income. And the worst part? They are oftentimes avoidable. Find out how you can avoid bank fees like out-of-network ATM fees, paper statement fees, and overdraft fees.
Overdraft fees
When a transaction pushes your checking account balance into the negatives, your bank will do one of two things: either cancel the transaction or let the transaction go through and push your account balance into the negatives. If the bank does the latter, it will loan you the remaining funds to allow the transaction to go through. It will also charge you an overdraft fee. Overdraft fees are typically $30.
Some banks will charge customers overdraft fees for every transaction they make while their account balance is in the negatives, while some may charge overdraft fees for every day that the account balance remains in the negatives. You will have to pay these overdraft fees, along with the loan from the bank in a short amount of time. If you don’t, your bank may charge you an extended overdraft fee — this is typically done after your balance has remained in the negatives for 5 to 7 business days.
How can you avoid overdraft fees?
One way to avoid overdraft fees is to sign up for an overdraft protection plan that allows you to link your checking account to another account. If a transaction ever pushes your checking account into the negatives, the linked account can cover the costs to stop the checking account from going into an overdraft. You could link your checking account to a savings account.
Whenever your savings account covers a transaction, you might face a transfer fee. Getting charged a different fee isn’t ideal, but it’s much smaller than an overdraft fee. Another option that you should consider is switching to a bank that doesn’t charge customers overdraft fees. This is a popular offering by online-only banks.
How can you avoid overdrafts?
Instead of finding a solution for overdraft fees, you should look to solutions that prevent you from going into overdraft altogether. The following options can do that.
Personal budget
A personal budget can give you clear spending guidelines for the rest of the month. When you follow those guidelines, you’ll be less likely to overspend and push your checking account’s balance into the negatives.
Balance alerts
Set up low balance alerts through your online banking. A low balance alert will let you know when the contents of your checking account are getting close to zero, forcing you to be careful about making any additional transactions.
Emergency fund
Instead of using your checking account to pay for an urgent expense outside of your budget, you can use your emergency fund. This could stop you from accidentally putting your checking account into overdraft. What if you don’t have an emergency fund? There are other alternatives to consider outside of your checking account — especially if the balance is close to the bottom. You can look into flexible online options like personal lines of credit loans.
With a personal line of credit, you can use borrowed funds to cover an urgent expense in a short amount of time. Once the expense is paid off, you can focus on a steady repayment plan through a monthly billing cycle. This could be a lot less stressful than trying to repay your bank’s advance, along with a collection of overdraft fees. Personal lines of credit loans should only be considered for emergency purposes when you don’t have enough savings available. They’re not meant for everyday expenses, like groceries or utility bills.
Out-of-network ATM fees
Whenever you withdraw cash from an ATM that isn’t in your bank’s network, your bank will charge you an out-of-network ATM fee (sometimes called a foreign ATM fee). In addition to your bank’s fee, the ATM will charge you a fee for using their services. This will usually cost you an extra $5 per withdrawal.
How can you avoid out-of-network ATM fees?
Try your best to only withdraw cash from ATMs that are in your network. If you’re not sure where all of those are located, you can use your bank’s mobile app to find the locations nearest to you. Another option is to ask for “cash back” at the register when you go shopping. A retailer might charge you a small convenience fee for this, which will be much smaller than an out-of-network ATM fee. They might charge approximately 50 cents for the service.
Paper statement fees
Banks will often charge you a “paper statement fee” to cover the costs of printing and mailing the paper statements to you. These fees typically range from $2-$3 every single month.
How can you avoid paper statement fees?
That’s easy. Go paperless. Log into your online bank account or mobile banking app and go into the settings. The settings should provide an option to go paperless. You’ll still have the option to review your bank statements online. If you ever need a physical copy of a bank statement, you can go to your online account, download it and print it at home. Don’t blindly accept these bank fees as the cost of doing business. You don’t always have to pay for them. Follow this simple guide so that you avoid these fees from this point forward.
Photo credit: The feature image is symbolic and has been done by Ono Kosuki.
