If you are at home pondering and hoping to save some expenses, congratulations, this article may help you. It may help you realize that you have been paying unnecessary hidden fees to the bank.
In daily life and financial management, the bank is your helpful assistant; however, it can also quietly charge unnecessary fees, becoming a leak in your wallet. Many bank customers are not aware that they are paying extra fees for services they do not need every month, or worse, they are not even aware of the existence of these fees.
Hidden fees are one of the simplest ways for banks to profit from customers. While the amounts of these fees may not seem astonishing, over time, the cumulative total cannot be ignored. In light of this, Motley Fool Money website has summarized 5 common hidden fees charged by banks. Let’s take a look at some of them together:
Some banks may charge you a maintenance fee every month simply because you have an account. These fees typically range from $5 to $30 per month, which could add up to hundreds of dollars annually.
Avoidance methods:
– Choose an account with no maintenance fees: Many banks, especially online banks, offer account options without monthly fees.
– Meet minimum balance requirements: Some banks waive maintenance fees when customers maintain a certain balance in their accounts. Before opening an account, make sure you can consistently meet this requirement.
– Opt for online banks: Many online banks do not charge monthly fees. Some online banks, while not having physical branches, still offer competitive interest rates and no minimum balance requirements.
Using an ATM outside of your bank’s network for withdrawals may incur fees of $2 to $5 per transaction, which can add up to a significant expense in the long run.
Avoidance methods:
– Use your bank’s ATM network: Understand and utilize the free ATM network provided by your bank to avoid using ATMs outside of the network.
– Choose banks that reimburse ATM fees: Some banks, like certain online banks, reimburse customers for fees incurred at non-network ATMs.
– Use fee-free debit cards: Some banks issue debit cards that allow fee-free withdrawals globally, which are more suitable for frequent travelers or customers needing to withdraw funds abroad.
When your account balance is insufficient to cover a payment, the bank may allow the transaction to go through but charge a high overdraft fee, often as high as $35. Frequent overdrafts can lead to serious financial burden.
Avoidance methods:
– Choose a bank with no overdraft fees: Some banks offer account options without overdraft fees.
– Set up account balance alerts: Receive alerts via text or email to stay informed about your account balance and avoid unintentional overdrafts.
– Link to a savings account or credit line: Link your checking account to a savings account or credit line so that when your checking account balance is low, it will automatically transfer from the linked account to avoid overdraft fees.
While traveling abroad or making cross-border purchases, banks may charge a 1% to 3% conversion fee for foreign currency transactions, which can be costly for individuals who frequently make payments in foreign currencies.
Avoidance methods:
– Use credit cards or debit cards with no foreign transaction fees: Some banks and credit card companies offer cards that waive foreign transaction fees, which are more suitable for customers who frequently engage in international transactions.
– Choose multi-currency accounts: Some financial institutions provide multi-currency accounts, allowing customers to hold and manage multiple currencies, thus reducing the need for frequent currency conversions and fees.
– Monitor exchange rate fluctuations: Before making significant foreign currency transactions, understand the current exchange rate and choose the right time to conduct the transaction to secure a better exchange rate.
Although electronic billing has become mainstream, some customers have not abandoned paper bills, which may incur monthly fees of $1 to $5 by banks.
Avoidance methods:
– Opt for electronic billing: Most banks offer free electronic billing services where customers can access bills through email or online banking platforms, which are both environmentally friendly and cost-effective.
– Set up bill reminders: Ensure timely viewing and management of electronic bills by setting up email or text reminders to avoid missing important information.