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How to Minimize Bank Account Fees

Banks used to make their money by taking customer deposits and lending it out at a higher interest rate. Along the way, they discovered they could siphon off a little bit here or there in the form of “fees” cleverly disguised as “convenience” charges.

Bankrate does annual fee surveys [3] of what banks charge and the fee amounts are absolutely astounding. Overdraft or nonsufficient funds (NSF) fees average $29.58, ATM surcharges average $2.22, and the average monthly service charge on a checking account is around $12.55. That adds up to billions of earnings for banks.

Let’s talk about how to minimize these fees.

This post is part of the Bargaineering Annual Financial Review [4] week series where we take a closer look at the four major facets of personal finance and see if we can do better. This post is part of day one – getting the most out of banking relationships.

Shop Around

When you’re deciding which bank to use, ask them for their fee structure so you can compare them. While you never want to be dinged for a fee, if all other factors are equal, go with the bank with the lower fees. Many banks will now refund you ATM surcharges, even if it’s another bank’s ATM, and many offer accounts with no account service fee if you meet their requirements.

Be Responsible

Ultimately, all of these fees are only assessed when you do something wrong. Overdrafts aren’t little gremlins that strike when you least expect it, they strike when you spend more money than you have. Take steps to be more accountable, whether it’s using online tools or balancing your checkbook by hand, and you’ll see yourself hit with fewer, if any, fees.

Opt Out of Overdraft

Overdraft protection exists so that you can continue to spend even if you don’t have money in your account. Many banks are now letting you opt out of the protection system. The upside is that you won’t be charged overdraft fees if you do overdraw your account. The downside is that your checks will bounce and your debit card will be rejected, which may themselves come with fees.

Research ATM Locations

ATM surcharges are 100% avoidable with proper preparation. Before you go on a trip, try to locate ATMs that are within your bank’s network. One of the reasons why we still use Bank of America is because there are Bank of America ATMs everywhere. If you’re one of the lucky few who banks with a bank or credit union that refunds a certain number of surcharges a month, then you can use any ATM without fear or reprisal.

Ask for a Fee Refund

No one is perfect, as much as we’d all like to think we are. So from time to time, everyone gets dinged with an overdraft fee or an account maintenance fee we didn’t know about. A few years ago, I didn’t realize that I needed to have a minimum balance of $300 in my savings account or face an account fee at Bank of America. I keep almost all of our savings in high yield savings accounts [5], we only had the BoA one for convenience.

After being dinged with the fee, I called them up and asked to have it removed. I didn’t have to give a reason because it was my first fee since being a customer and they gladly refunded. A week later I closed the savings account because it was redundant.

The key with asking for a refund is being polite and then, should they refuse, politely remind them that, while you enjoyed their service, you could go anywhere. Always be courteous because the person you’re talking to is a human being, just doing their job (with the ability to help you out), and don’t take your anger out on them. It never helps.

Are there techniques you use to avoid the various banking fees that I missed?

(Photo: colinbrown [6])