At one time or another, we all face certain budgeting and financial issues. While handling a tight budget, it is not always possible to pay additional fees. These additional charges are common in the banking and financial service industry.
Do you know about all the ways banks take your money? If you do not know it already, most banks charge unnecessary amounts for some basic services. You have to pay that amount in order to continue using these services.
So, what to do when banks take your money? No matter how big or small the bank fees you are asked to pay are, you can save your money by avoiding these unnecessary charges. Continue reading to learn about some of the most common banking charges and the best ways to avoid them.
1. Minimum Balance Fees
Once you have opened your savings or checking account in a bank, check whether or not it has any minimum balance requirement. You can protect yourself against a minimum balance fee by ensuring that your account always has the minimum required balance.
Other than that, there are two ways to avoid minimum balance charges. First, try to open an account that has no minimum balance requirement. Even if it has a minimum balance requirement, make sure it is a small required amount.
The second way is to set up direct deposit. Checking accounts allow automatic deposits of your paycheck or other sources of income. With automatic direct deposit, you do not have to worry about depositing your checks on time every month. Your checks will be deposited automatically in a timely manner and this will ensure you have the minimum balance in your account.
2. Inactivity Fees
Banks minimum activity requirements sometimes result in additional costs. This means that if you do not use your savings or checking account by withdrawing or depositing funds, you have to pay a fee as a maintenance cost. You can avoid these fees by making sure to use your account or by speaking to a representative at your bank.
Also, the majority of senior checking accounts or student bank accounts do not have any account maintenance fees. If you qualify as a senior or college student, it is a good idea to take advantage of these special accounts.
3. Out-Of-Network ATM Fees
ATM charges are another way your bank takes your money away. Usually, if you use an out-of-network ATM (an ATM that is not affiliated with your bank), you will have to pay an additional amount. Basically, you have to pay money in order to have access to your money.
The only way to avoid these unnecessary charges is to always use the ATMs affiliated with your bank. Also, in case you have to use the out-of-network ATMs, withdraw a large amount all at once to avoid fees for multiple withdrawals.
Furthermore, a good idea is to carry a decent amount of cash in your wallet whenever you go somewhere. If possible, open your account at a large bank that has a wide network of ATMs.
4. Overdraft Fees
An overdraft charge is imposed on a customer when he or she uses more money than is in the account. It basically means you have spent more than your limit. A great option to avoid these charges is to look for banks with no overdraft fees or banks with overdraft protection.
Moreover, if you are unable to find such banks, then always keep an eye on your account balance and monitor your expenses. Maintain a journal for recording your financial transactions. You can also record this data in the back of your checkbook. Alternatively, you can also use budgeting software or a simple mobile app for monitoring your balance. Another option is to register for an email or text alert service with your bank. By keeping track of your spending, you will be able to prevent these overdraft charges.
5. Late Fees
Almost all banks charge different late fees for late credit card payments or other services. To avoid such charges, learn more about the services, terms and conditions from your banking representative. Another good idea is to use a free student or senior checking account, which may waive late fees.
6. Yearly Credit Card Fee
Usually, you have to pay an annual fee just for using your credit card. In fact, credit cards have gained a bad reputation because of these additional charges. But you cannot ignore the fact that credit cards are very handy and offer several advantages. So, how can you avoid these charges?
There are a few ways you may be able to eliminate the annual credit card fee. The first and best way is to ask for a fee waiver. Although this does not work every time, it is worth negotiating. Also, check if your credit card company has a “no fee” credit card and switch to this if possible.
7. Foreign Transaction Fee
You may already spend more than you planned on your overseas trips, so you do not have room for any additional transaction charges. When you are in a foreign country, try to avoid the ATM fees. As usual, you have to pay a small amount every time you use an ATM. Try to open an account with a bank that has a global ATM network. These include large banks that waive the charges for ATMs.
Alternatively, you can select a bank that charges a minimum withdrawal fee per year or per month. And as usual, try to carry enough cash in your wallet so you do not have to use the ATMs.
These were some of common financial charges and ways to avoid them. To enjoy additional benefits and avoid fees, try to open multiple accounts at the same bank. Open at least two if your bank offers great services. This will help you to develop a strong relationship with the bank. If you are seen as a loyal customer, the bank may be more likely to waive fees and allow you to enjoy free services.