Banks always look for new sources of profit — and often find them at the expense of regular customers in the form of new and increased fees.
Free checking accounts are increasingly hard to find in traditional banks. And often they are only granted to customers with high bank balances.
In recent years, there have been increases in many types of fees, including:
- Monthly maintenance fees for checking accounts
- Overdraft fees
- ATM fees banks charge their own customers for using an out-of-network ATM
- ATM fees a bank charges noncustomers for using the bank’s ATMs
Still, you can find ways to avoid being gouged. Following are ways to sidestep or minimize bank fees:
1. Shop for an online bank
There may be some disadvantages to leaving your brick-and-mortar bank, including greater difficulty making large withdrawals because of ATM daily limits, for instance. You may miss the access to in-person customer assistance and extras like notary services. But because online banks have lower overhead, they can afford to charge you less.
If you shop for an online bank, you can find big savings. According to MoneyRates.com:
The number of online banks offering free checking has gone up since 2013. Fully 69.6 percent of online checking accounts have no monthly maintenance fee, compared with just 24.8 percent of traditional, branch-based accounts.
So, if low fees are your most important consideration, shop around for an online bank. One of the best ways to shop around is to visit our Solutions Center and search for banks paying the highest rates.
2. Shop for a credit union or community bank
Some people are not comfortable with online banking. No problem: Credit unions offer another option that is generally less expensive than commercial banks. Many credit unions offer free checking without requiring a minimum balance.
But do not assume all credit unions have low fees or free checking. Compare costs at credit unions versus banks, because fees and policies can vary greatly.
For more, check out “9 Reasons to Love Credit Unions (and Not Big Banks).” Find a credit union near you by searching at the National Credit Union Administration website.
Fees also can be lower at community banks, Community banks pride themselves on customer service, so they often keep fees lower. But, again, it all depends on the bank you choose, so shop around.
3. Use electronic features
“Banks save when you serve yourself, just like gas stations do when you pump your own,” Consumer Reports says.
Here are two ways to save using electronic features:
- Opt out of paper statements. Receive online statements if your bank charges customers for paper statements. It is a win for the bank (reducing its printing and mailing costs) and for the environment.
- Switch to online bill pay. You can stop buying envelopes and stamps for paying bills, and automate your payments so you will never again incur a late fee for forgetting to pay a bill.
4. Sign up for direct deposit
Some banks and credit unions offer free checking to customers who sign up to have paychecks and certain other regular deposits electronically deposited into the account.
5. Look for a volume discount
Some banks waive fees or give a discount when you maintain multiple accounts. But be sure to ask, because this is not a certainty.
6. Maintain a minimum balance
Banks often waive the monthly checking account fee if you keep a minimum balance in the account.
Keeping a balance also helps you leave a buffer for mistakes or miscalculations. But much depends on the size of the balance required. You may have better uses for a large amount of money — such as retirement or investment accounts with potential for growth.
7. Get cash at the grocery store
Avoid ATM fees and the inconvenience of finding a machine by paying for your groceries with a debit card and getting cash back.
8. Use only network ATMs
Fees pile up when you use an out-of-network ATM: For starters, you pay the network’s charge, and, on top of that, your bank charges a fee for going out-of-network.
Instead, carry a minimum amount of cash at all times so you will not be forced to use a “foreign” ATM. If you must use an out-of-network ATM when traveling or shopping, withdraw a large amount so you will not have to come back for more.
9. Subscribe to email and text alerts
Use your bank’s system of electronic alerts to receive a text or email when an account balance dips below a certain level. You can choose the level yourself.
10. Cancel overdraft protection
Overdraft protection programs can cause fees to spiral out of control. So, decline the option.
11. Track your money closely
Form a new habit: Track your spending closely. This will help you prevent exorbitant overdraft fees, not to mention overspending on unnecessary purchases.
It does not matter what system you use for tracking. We recommend You Need a Budget. You can learn more about it in “Quit Living Paycheck to Paycheck: This Tool Makes It Easy to Save.”
However, you also can keep a handwritten account or use a spreadsheet.
12. Be willing to move
Comparison shopping does not need to be time-consuming. Make a list of the features and services that matter most to you and compare costs for those at several institutions by phoning or going to their websites. For some pointers on changing institutions, check out: “How to Switch Banks in 5 Steps.” Then, search for banks paying the best rates in our Solutions Center.
What are your tips for low-fee banking? Share your thoughts in comments below or on our Facebook page.
Kari Huus contributed to this post.
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