Managing Your Checking Account — Avoiding Bank Fees
All banks charge fees, they are a fact of financial life. Many different fees are charged by banks in an attempt to develop what the banks consider a positive adjustment in consumer behavior. One example is fees for an “excessive amount” of ATM transactions per month. ATM fees alone create over $2 billion a year for banks. Another is a fee on accounts with too little money in them. Fee structure may be used by banks to persuade them to create positive cash flow in their accounts held with that bank. Some may seem prohibitive but they are all legal. The key for consumers is to find out what they can do to avoid these fees.
Bank fees have increased over the last ten years due in part to competition for loans. This competition has forced bankers to offer lower interest rates to borrowers. One of the benefactors of these trends has been home buyers, who continue to pay some of the lowest mortgage rates in decades. But it also means that banks aren’t profiting as much on those loans. In order to compensate for decreasing profits, the banks and are using extra fees to enhance the bottom line.
Bank customers have several options available. They can work to circumvent negative bank account balances or find a bank that is more understanding when there is a negative balance. Bounced check fees generally run approximately $25. Due to new federal laws concerning checking accounts, the days of floating a check for a few days until it is processed are a thing of the past now that checks can be processed within 24 hours.
Given the new check processing time lag, this should affect a lot of previously accepted check writing behavior by bank customers. Bouncing checks is easily solved by not writing checks for money that’s not in the account. Bank customers may also sign up for overdraft protection that comes with its own fees. Depending on the amount of bad checks, this could equate to a real savings. As many of us are painfully aware, bouncing a check (even by accident) can destroy your banking privileges if you are reported to ChexSystems. To stay off the ChexSystems list, you need to avoid bouncing checks.
The simple solution is you need to shop and evaluate banks as you would any other business offering a product or service. Always specifically look at the fee system for the type of accounts or banking habits you’ve developed. This way you can find a bank that will more closely meet your particular banking habits without consuming all your money in fees.
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