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How to avoid bank fees

Bank fees can chip away at your hard-earned money. Has your bank added fees? Are you looking for ways to pay less for banking services? Because many bank fees recur month after month, a small investment of time researching your options can generate a big payoff. Here are a few ideas that can help: 

  1. Sign up for direct deposit. You can make your life easier while saving money. With payroll direct deposit, your pay is zapped into your account automatically every payday. You receive your pay even if you are out sick or on vacation. You don’t have to remember to swing by the bank on your way home. It’s so convenient. Even better, it’s free and some banks waive account fees for direct-deposit customers. 
  2. Put more money in your account. Many banks have a minimum threshold for account balances. Adding enough money to cover the minimum may be a way you can reduce the fees. This is a good use for an emergency fund. With FDIC insurance, it’s a safe place to keep your money and it may help you save on bank fees until any point in time when you need the funds.
  3. Consolidate your accounts. Many banks offer reduced fees to customers who have a combination of savings, checking and loan accounts.  In particular, you may be able to save on the overdraft fees, or the non-sufficient fund fees, when your checking account is “linked” to a savings account or a money market account with the same bank. Check with the bank that holds your mortgage or auto loan or even with your insurance carrier or investment firm to see if their company offers bank accounts with perks like fee reduction for having multiple products with them.
  4. Check your statements. Review your bank statement carefully every month. Look for any fees listed that you didn’t expect. If you think that your bank made an error, contact their customer service center. Even if it isn’t an error, you should have the bank representative explain in detail how the fees are incurred and how you can avoid them.  Customer service representatives might be able to waive the fee if it’s a first-time incident caused by misunderstanding of how fees are charged.
  5. Get paperless statements. If you are still getting paper statements in the mail, this could be an opportunity to avoid another fee.  Some banks charge for paper statements. In that case, opt to view statements online to save money. Your bank may also reduce your fees if you use electronic bill payment services.
  6. Watch your ATM habits. Using an out-of-network ATM is an expensive proposition, but a lot of people do it because it’s convenient. See if your bank has an app that makes it easy to find one in its network. A short walk may save you big bucks. Many banks participate in surcharge-free ATM networks, which come in handy when you travel. 
  7. Use a debit card. Many banks will waive fees if you agree to use your debit card a certain number of times a month. That’s because banks collect fees from the merchants accepting these. If your bank is one, a change in habits could save you cash.
  8. Use a credit card. No, this isn’t a contradiction of the last point. If you don’t have a cushion in your account or an overdraft protection, you run the risk of accidentally overdrawing your account and being hit with the non-sufficient fund fees.  In those instances, consider using a credit card instead of a debit card. Be sure to pay off the bill in full each month, though, or you’ll end up with interest charges that are most likely even higher than the non-sufficient fund fees.

Shop around.  Before you shop around for a bank account, know what’s important to you.  Is having low or no fees across the board the most important?  But is that contingent on some activity level that you will not be able to achieve easily? Or is the competitive interest rate more important and you’ll be willing to monitor your account a little more closely to avoid fees? Sometimes there are trade-offs like those that you need to watch out for. If you are unhappy with the fees you are being charged, see what is causing those fees and find banks that do not penalize you for those activities or see what your bank can do. As a consumer, you have more power than you know, especially if you’ve been a great customer.

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