How to Avoid most bank Account fees
In my humble opinion, most banks and financial institutions are just professional establishments where legalized, bureaucratic financial robbery is enabled while you stand in line and several bank teller windows stayed closed.This is a great reason to open an online bank account. I am going to open one soon, since they mostly do away with most traditional banking fees.
My current bank only causes me psychic tsunami waves of headaches and migraines due to the excessive amounts of maintenance and penalty fees I am charged.
I am charged a $12 monthly maintenance fee which will only be waived when I deposit and maintain more than $3,500 monthly.
In fact, the average monthly bank account fee is $12.
The median overdraft fee is about $34.
That is where I really get hit financially. I am travelling internationally now as I write. Every time
I visit an ATM, I am hit with miscellaneous fees.
Like when I order fast food via online delivery.
Big Mac Attack
I must always be aware of potential fees before I withdraw money. However, when it is time for a Big Mac via online McDelivery, I must confess I am not always aware of finances.
I had just enough money in my account to cover the $6 purchase. However, I was hit with about $15 in international and out-of-network ATM fees.
I was protected by overdraft protection for the ATM fees.
Still, I was hit with a $0.12, “international transaction fee,” for the international McDelivery online order.
So, I went over $6 for the transaction and I only had $6 to begin with.
Which in turn triggered an overdraft charge fee of $35!
So, an international $6 Big Mac craving, and not calculating the online fees, cost me over $50 in punitive bank fees!
Sure. I am to blame. I don’t deny that.
But exactly how is this NOT a system of bureaucratic finance robbery perpetrated against consumers?
Well, since the key to most problems is enlightenment, allow me to inform you of how you can avoid most bank account maintenance, penalty, and service fees.
Still, the best way to solve a problem is to understand it. So, let’s discuss maintenance fees, how much you’re paying for them, and how much you think you’re paying.
Misconceptions About Maintenance Fees
Almost 9 out of every 10 American households feature individuals maintaining a bank account.
However, most Americans with banking accounts are not aware of how expensive it can be to financially maintain those accounts.
Most Americans think that they’ll pay about $2,244 in various banking fees over the course of their banking lifetimes.
That figure is nowhere close to the reality.
In fact, the average banking consumer will pay over $369,000 in various banking account maintenance, penalty, and service fees over their banking lifetimes.
It gets worse. Imagine if you invested $369,000 with an assumed 6% annual return on investment rate.
Well, you could potentially make over $1.1 million on such an investment instead of using the principle to pay for banking account fees.
If it sounds like that Americans are paying a lot for banking account fees, well, it is by design.
This isn’t by accident.
For many large corporate and regional banking institutions, the collection of bank account maintenance fees can account for over 40% of their profits.
Fees are big business for banks. In 2017 alone, banks collected over $11.45 billion in overdraft fees.
Additionally, the 10 biggest American banks charged $30, or more, for their average overdraft fee.
These facts are not a modern outlier of banking fee excess. Banking fees have been increasing incrementally since 1998.
In 1998, the average non-interest accruing bank account maintenance fee was $5. The maintenance fee for bank accounts with interest rates was $10.
By 2019, some banks were charging as much as $15 just for the monthly maintenance fee.
The average overdraft fee in 1998 was just $21.
So, what can you do about all of this? Reconsider where you bank or pay more attention to the fee policies of your bank.
Regular Maintenance Fees and How to Avoid Them
Here are some strategies to help you avoid some of these common bank account fees:
Monthly Maintenance Fees
Depending on the bank, you could end up paying anywhere between $12 to $15 monthly for just the maintenance fee.
A monthly maintenance fee is just a fee you pay for the privilege of depositing your money in the bank in the first place.
Depending in the bank, you’ll have to maintain a minimum monthly balance requirement anywhere between $1,500 to $10,000.
So, you just have to keep a balance above your bank’s monthly account minimum to avoid the monthly fee.
Or, you can just open an online bank account, since many of them don’t have a monthly maintenance fee.
That is because these banks only exist digitally or only maintain a few physical branches.
Such online banks include:
- Bank5 Connect
- Capital One 360
The only thing that you can do avoid excessive ATM fees is to always remember to use your own bank’s ATM services when possible.
If your bank does charge an ATM fee, try not use it excessively. Calculate how many times you’ll need to withdraw money weekly and monthly for your budget and to save on fees.
There isn’t much you can do to save on ATM fees if you’re traveling internationally. This is especially true if you’re travelling in developing countries.
Try to bring enough cash, and below the reporting requirements for the countries you’re visiting, if possible, in such situations.
Overdraft Penalty Fees
Always be aware of how much money you have in your account. Many banks require you to apply or request for overdraft protection.
Also, overdraft protection may only cover you up to $50, $100, or whatever amount allowed by your bank. You’ll get socked with fees if you go over that amount.
Your best bet is to request that any charge or transaction against insufficient funds become automatically declined by your bank.
Paper Statement Fees
Your bank is probably charging you to send you your monthly bank statement via snail mail.
You may be paying as much as $3 every month, or $36 annually, just to get a paper bank statement in the mail once a month.
Check to see if this is the case and opt for monthly email statements.
Save a Fortune or Pay a Fortune in Banking Fees
Remember how I discussed the fact that since 1998 banks have been incrementally and steadily increasing banking fees.
They do that because they can, and they protected by federal legislation and corporate law.
It’s legal because no one is forcing you to patronize their services.
There is no limit to the amount of fees that banks can charge you for overdrafts, monthly fees, international transaction fees, and so on.
It doesn’t help their public relations to charge $25 for monthly fees overnight, so they do it incrementally.
Go over the fee policies of your bank and seriously consider your alternative options.
There is no uniform banking account fee standard. They differ from bank to bank and as I said, they can charge what they want when it comes to the maintenance of your own money.
You could be spending a fortune in fees just to deposit and save your money, which kinds of negates the purpose.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.