Ben Todd | Apr 16, 2017 | 3
How To Avoid Bank Fees – Part Two
In part two of our exploration of how to avoid bank fees, we cover some of the more general fees that people face when they pick and choose a bank. Simply knowing what type of fees you may encounter is enough to help you pick a suitable bank. After all, your greatest defense against banking fees is your ability to switch to a bank that doesn’t charge such fees. One may argue that banks have to make their money through fees, but let them make it through other people’s fees and not yours. Plus, the banks make millions through simply holding your money and investing it as they see fit, so you shouldn’t have to pay excessively for fees.
Few banks are going to charge you for receiving statements unless you want them more regularly than the bank usually issues them, or if you want tailored statements, or if you want paper statements. Charging for paper statements through the mail is a relatively new charge that banks are adding as a way of getting people to go paperless. Paperless means that your statements are emailed to you, or they may be retrieved via your online account.
Avoid Bank Fees
Sign up for paperless statements so that you do not have to pay to have them mailed to you. That is the only way to avoid this fee. There are very few banks that offer paper statements for free. As far as I can tell, there is no way to avoid the paper statement fee besides opting in for e-statements.
Cancelling And/Or Re-Ordering A Card Fee
Some banks will charge you to cancel your current card and send you out a new card. Banks will charge the same fee if your card is lost or stolen and you need a new one sent to you. Many banks no longer charge for replacement cards. If you need your bankcard to be sent to you quickly or if you need it shipping overseas, then there is a strong possibility that you will be charged a fee.
Avoid Bank Fees
Some people will tell you to have a backup card, but I would not recommend it. Instead, sign up with a bank that does not charge for replacing your card. If you need your card quickly, then do whatever you can to avoid it, such as going online and transferring your funds to another account that has its own card. At a push, you may transfer your money to somebody you trust and you may use their card while you wait for your replacement card to arrive. It is a little trickier if you are abroad and you need a replacement card, so try to take a credit card or two and start using your credit card if you lose your bankcard. You may replace your bankcard when you get home.
Foreign Transaction Fees
If you use your bankcard abroad, you may have to pay fees. You may firstly have to pay the exchange fee and secondly have to pay a separate fee for the privilege of using your card outside of your own country. You also have to remember that some banks will have a great exchange rate and some will have a poor exchange rate, and that too may impact how much you spend in total. There is no way to avoid the exchange rate/conversion cost unless you use something such as Transferwise where you convert your money before you go and put it back into your bank account so you may spend it. However, even conversion companies such as Transferwise are going to charge you a fee for converting.
Avoid Bank Fees
We have a few sneaky ways of getting around the exchange process so that you do not lose money or so that you lessen the amount of money you use. The methods on how to lower your exchange costs are tricky-but-doable. The best way to avoid foreign transaction fees is to sign up for a credit card that is especially made for foreign transactions. This type of credit card will give you a good exchange rate and won’t charge you a fee for using your card in stores and with merchants. Most credit cards are going to charge you a fee for withdrawing money, be it abroad or at home, so there is no way to avoid withdrawal fees while abroad.
Dormancy Fees Or Inactivity Fees
Some banks may charge you a fee if your account is dormant for a while. Typically, a bank will charge you a monthly fee if there is no (or too little) activity on your account. In most cases, an account must lie dormant for around six months before a fee is applied. Such fees are usually an indication to a user that his or her account needs to be closed, but there are some people who are stung by these fees and don’t realize until it is too late. For example, you may have stashed away a few hundred dollars for a rainy day and forgotten about it, only to find that your money has slowly drained away through inactivity fees.
Avoid Bank Fees
Simply avoid banks and accounts that charge a fee for inactivity. This is especially true of savings accounts because it is desperately unfair to charge an inactivity fee on a savings account. Find a bank that doesn’t charge dormancy fees and avoid any that do.
Excessive Activity Fees
If your current account/ checking account/ debit account has an excessive activity fee, then you need to change banks immediately unless your account is special in some way. Savings accounts will often have a fee for excessive activity because Federal Regulation D is a law that defines a savings account as one where users make no more than six withdrawals or transfers per statement cycle or calendar month.
In other words, a bank may charge you a fee if you withdraw money or transfer money from your savings account more than six times per month. They may charge you a fee to discourage you from using your savings account in a manner that is contrary to its federal definition. Many banks will give you a warning if you move money from your savings account more than six times in a month, and some will start to refuse transactions if you try to transfer/withdraw more than six times per month.
Avoid Bank Fees
Stop transferring money out of or stop withdrawing money out of your savings account as often. Keep your money in your checking account if you need to withdraw it or transfer it that often. Try planning ahead to ensure you do not move money from your savings account as often as six times per month. Better still, withdraw a larger amount at one time so you do not have to keep dipping into your savings as often.
Fees For Teller Services
In order to encourage online banking, and maybe even as a way of postponing the closure of high street banks, more and more banks seem to be leaning towards teller fees. Some will charge you a fee for depositing money or checks (this happens more with business accounts than with private/personal accounts), and some will charge a transaction fee for withdrawing your money with a bank teller.
Avoid Bank Fees
Do not conduct transactions with a teller. More and more banks have an automated option where you may withdraw or deposit money using a machine in the bank so that you do not have to go up and see a bank teller/clerk. Withdraw money with an ATM unless it is a large amount, in which case you may need to pay the fee for the convenience. Conduct more/all of your transactions online so long as there are no associated transaction fees, and have your employer pay you by direct deposit.
If you are still paid by check, then use a bank that allows the use of an app that deposits your check. Quite a few banks are adding this feature to their inventory. Here are 37 banks that allow you to cash checks by depositing them with an app on your phone or tablet.
Early Closure Fees
You may be surprised to learn that some banks will charge you a fee if you open an account and then decide to close it. In most cases, a bank will demand that you keep your account open for at least 180 days before you are able to close it. If you try to close it within that time period, they are probably going to charge you an early-closing fee.
Avoid Bank Fees
Simply keep your account open for as long as they stipulate and then close it after that point. Just make sure that there are no maintenance or inactivity fees prior to opening your account.
Wire Transfer And Online Transfer Fees
If you are being charged for transferring money from one of your accounts to another, then you are being ripped off unless the account you are transferring it to is special in some way, or unless the money you are sending needs to be exchanged from one currency to another.
Unless you are transferring or wiring money abroad, there is little reason why you should be charged. Yet, some banks are going to charge you for wire transfers, online transfers or both. It is seemingly fair enough if they charge for telephone or teller transfers because in that case a human is involved, but online and wire transfers are automated these days.
Avoid Bank Fees
You should avoid banks that charge for online transfers and wire transfers. If they are adding fees because you do it over the telephone or with a teller, or because the money is going abroad or needs to be exchanged, then it is mildly acceptable. Under mostly any other circumstances, it is unfair to charge a fee for you to transfer or wire money to another account; be it your own or another persons account.
Read The Small Print, And Read User Reviews And Professional Reviews
One of the best ways to avoid fees is to do a lot of research into a bank before you sign up, and a great resource is the bank’s small print, user reviews and professional reviews.
Read The Small Print
It sounds a little cliché telling you to read the small print that a bank gives you, but it is not as difficult to read as it first appears. The small print is separated out into sections, and even a quick skim read will tell you if the section requires a deeper read, or if it can be skipped. Once you settle in to read it, you will be surprised how easy it is to understand. Use time that you would otherwise waste, such as when you are sitting in a waiting room. If you have a digital version of their small print, then use the search function to search for “$” and “fee” and “fees” and “penalty” and “withdrawal” and “cancel” and “liability.”
Read User Reviews
User reviews are a fantastic resource for finding out which banks will hit you with fees. The first reaction some people have to being hit with fees is to go online and rant about it. Read the negative statements people have made about the bank you are researching and look at how many of them complain about fees.
Read Professional Reviews
Professional reviews are not as useful as user reviews when it comes to finding out which banks have fair fees and which are money grubbing. This is because many online reviews are paid for by the marketing departments of the banks they are reviewing. However, when banks are compared, the reviewer may post a section on fees that explains which banks charge which fees. Just remember that the bank that seems the best and cheapest on the article is probably the bank that paid the writer the most money.
Conclusion – Consider Contacting Your Bank
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If you want to avoid fees, then follow the advice in this article and the article before it known as How to avoid bank fees part one. If the fee has already been placed on your account, then there is no reason why you cannot call your bank and ask them to remove the fee. They are probably going to say no, but there is no harm in asking. Even a lame excuse may be enough to convince the telephone worker to remove your fee, especially if the bank has you fill out a satisfaction survey after each call. Just make sure you leave a glowing review if the telephone worker removes the fee because it encourages them to do it more often.