Five Ways You Can Minimize Bank Fees

Banking firms share the same goal of making money as their depositors.  Unlike account holders, many institutions generate their profits through a lengthy list of fees.  The following tips will explain the basis of these charges and how you can avoid them.

Record All Transactions

Overdraft charges are possibly the biggest cash cow for banks.  Beyond the $35-40 fee per purchase with a negative balance, most depositories won’t give you a low funds warning.  Being proactive is your best defense against overdrawing your account.  Retain all sales receipts and update a written ledger immediately after shopping trips.  If your debit card doesn’t charge you for PIN purchases, select debit over credit at your favorite stores.   Using your PIN is not only more secure, it posts your purchase quicker than choosing credit.

Use the Cash Back Option

You should never be charged for accessing your money from an ATM.  However, most account providers think otherwise.   In addition to their fees, the owner of a cash terminal also docks you $2-4 for using their machine.  Avoid this “double dipping” by asking for cash back at the register.  This can be especially cost-effective if you’re traveling out of town and away from your institution’s ATM network.

Make Sure You Have the Right Account

Being educated about your accounts will help you achieve the same “free chequing” that banks offer as a benefit to new depositors.  Watch on your statement for “monthly maintenance charges.”  You could be losing up to $5 per month simply for being unaware of minimum balance requirements.    Paying close attention to your online banking app or statement is only one solution.  If you have $3,000 in your account, make sure you’re not in a higher-tier package that demands a $5,000 balance.  Also, consider changing accounts if you’ve recently depleted your savings to make a down payment on a new car or house.

Write Fewer Cheques

Besides saving trees, you’ll also save money.  A cheque order usually carries a cost of $30-$50.  There’s also an indefinite lag time between when you give someone a cheque and when they actually cash it.  This puts you at an increased risk of forgetting about past payments and potentially overdrawing your account.

Don’t Accept Personal Cheques

The reason why most businesses don’t take personal cheques is obvious.  They don’t want to assume the risk of a cheque not clearing.  What isn’t overtly apparent is something called chargeback.  Yes, your account can get hit with a $25-$40 penalty if that birthday cheque from a relative bounces.  What’s worse is that clearing a bounced cheque can be attempted multiple times by your institution.  If the cheque is returned for insufficient funds a second time, you’ll get whacked with another chargeback fee.  At the very least, be careful of someone who insists on writing a cheque as payment.

The best countermeasure against these costs is being proactive.  Thinking ahead goes way beyond preventing you from having a negative balance.  It will also make your banking relationships more positive and profitable.

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