Seven Lessons on How to Pay More Bank Fees

Do you want to pay more in bank fees on your checking account? Follow my advice you will spend more than intended on bank fees!

1. Ignore your account between paychecks.

• Lots of people only look at their account on payday when they make a deposit. “I’m in a negative balance. Why?” They don’t keep a running total on their check register nor use online or mobile banking to track their usage. This can result in multiple overdrafts costing at least $35 for each occurrence.

2. Ignore financial institution correspondence that comes with your statement.

• Financial Institutions can make changes to their accountholder agreements. Often these changes affect the fee schedule of the institution. If one ignores the changes by failing to read the statement enclosures, they may fail to heed a warning that their minimum balance has increased and start paying a monthly fee or miss out on some other change that will result in higher fees.

3. Ignoring minimum balance or direct deposit requirements

• To maintain a free checking account, many financial institutions require that an accountholder maintain a specified minimum or have their paycheck directly deposited to their account. Drawing funds so the account balance falls below the required minimum or changing employers and forgetting to set up direct deposit can result in a member paying higher fees.

4. Skip Overdraft Protection

• Yeah, you probably won’t make any mistakes with your account so Overdraft Protection is probably unnecessary. But, of course, if you do make a mistake, you will pay $35 or more per occurrence. Good overdraft protection provides you with a line of credit or a transfer from your savings account that is paid to your checking account if an item is presented for payment and there are insufficient funds. Your fee for the transfer may be free or as little as $5. That is a lot less than an overdraft or Non Sufficient Funds charge.

5. Move to another financial institution and ignore your old account.

• You moved to a new bank or credit union and left a few bucks in the old account in case something comes in. After a while, you forget about the old account. Does your accountholder agreement have built in fees for inactivity? Some institutions enforce inactivity fees of $5 or more per month should you stop using your account and allow it to become inactive or dormant. Remember to close old accounts when you change institutions. Not only can you lose money with inactivity fees, your account could just get old and after three years of inactivity, it may go dormant. Allowing your account to go dormant means that any money remaining in the account at the end of three years of inactivity can be sent to the State of California’s Controller’s Office. The money can be redeemed by the accountholder but it takes time to go through the bureaucratic process.

6. Using money orders to pay for items that require guaranteed funds.

• A financial institution will charge $5 or more to issue a money order or cashier’s check. Did you know that if you send a check through your online banking it is a guaranteed check and it is free?

7. Use ATM’s indiscriminately

• If you are not using the ATM’s that are authorized by your financial institution you will likely be charged for each instance of usage. Those fees are not just from your bank, they are charged by the foreign financial institution’s ATM for non-customer usage. Costs: usually $5 -$7 per instance. You could be charged $2-3 by your institution and as much as $5 by the company that owns the ATM. 

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What is the difference between banks and credit unions? Some teenagers in Alberta, Canada came up with an ingenious video to describe the differences. It is linked here. I hope you enjoy it! 

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