How to Avoid Bank Fees

Bank fees have risen dramatically over the years. If you are not careful, you can waste hundreds of dollars in bank fees over the course of a year. Between overdraft charges, insufficient funds fees, excess withdrawal fees, and account maintenance fees, your bank account can cost you a lot of money. However, if you are careful and follow some simple advice, it is possible to save a lot of money by avoiding bank fees.

First, it is important to know the type of account that you have. Different accounts will have different balance requirements, transaction limits, and maintenance fees. Once you know which account you have, pick up a copy of a Fee Disclosure Statement from your local bank. You may also be able to get this information online. Now, read the fee disclosures that apply to your account type. Also, find out what your statement cycle is. A bank determines maintenance fees based on your statement cycle, not necessarily by calendar month. Your statement cycle can be found by looking at the end date or close date on your last statement.

Maintain Your Minimum Balance Requirement
Now, look to see if there is a minimum balance requirement for your account. Some accounts will require that you maintain a minimum daily balance in order to avoid a monthly maintenance fee. If your balance requirement is $500, you will be charged a bank fee if your account drops below that balance on any given day of your statement cycle. It is possible that your bank will charge you $10 or more per month if you cannot maintain that balance requirement. If you consistently fall below that balance requirement, it may make sense to change to a different account type.

Do Not Exceed Your Transaction Limit
Next, see if there is a transaction limit on your account. Some accounts, typically savings and money market accounts, will limit the amount of withdrawals that you can make per statement cycle. If you are limited to three withdrawals per month, do not exceed that limit. Going over the limit may incur bank fees of $5 or more for each transaction over the limit. If you have a savings account and you are consistently going over the transaction limit, it may be time to switch to a checking account.

Avoid Bouncing Checks
It is most important to avoid overdraft charges and insufficient funds fees. These bank fees can cost you $25 or more every time that you write a check that exceeds the balance in your account. Bouncing a few checks can get very expensive in a hurry. To avoid bouncing a check, make sure to keep an accurate check register, so that you know the balance in your account at all times. Every time you write a check or make a withdrawal, log that transaction into your check register immediately. Also, call or go online every few days to make sure that your check register reconciles with the activity that your bank shows. When you receive your monthly statement, you should do a line-by-line audit to reconcile all activity on your account. In addition, it is important to make sure you have sufficient funds in your account before you write a check or use your debit card. So, if you make a deposit, make sure that deposit has posted to your account before you write a check. Just because you made a deposit and have a receipt in your hand, does not mean that deposit has posted to your account. For instance, deposits made on a Saturday may not post to your account until Tuesday night at midnight, on holiday weekends. Look at your receipt to see the date that your deposit will post.

Avoid ATM Fees
You can save money by using your own bank's automated teller machines. Using another bank's ATM will often cause you to be charged twice; once by the company that owns the ATM and a second time by your own bank. A single ATM transaction can cost you about $3 or $4 in bank fees, which is expensive if you are only withdrawing $20 or $40. If you consistently use automated teller machines that are not owned by your bank, the fees will add up in a hurry. By planning in advance how much money you will need, you can reduce the amount of trips you make to an ATM and in turn reduce your bank fees.

Avoid Debit/Check Cards for Certain Transactions
If you are paying for a hotel room or renting a car, it is better to use a credit card and not a debit or check card. Hotels and car rental agencies will place an authorization hold on your card when you check in or pick up the car. The authorization hold is for the estimated amount of your charges. Once you check out of the hotel or return the rental car, the actual charge will then be put through to your card. Often, the authorization hold will not drop off for about a week. Therefore, for one week, you will have a hold on your account in addition to the charge that you paid. With a credit card, the authorization hold is on your credit limit and it drops off, so it never appears on your statement. However, with a debit card, the hold is on the available funds in your checking account. Therefore, even though you think you have some money in your checking account, that money may not be available to you until the authorization hold drops off. For more information on this and other things to be aware of with debit cards, check out http://clarkhoward.com/shownotes/category/7/40/225/

By choosing the right bank account, keeping accurate records, and understanding how to avoid bank fees, you can save yourself a lot of money.