How to Stop Getting Nickel and Dimed by Your Bank

Have you ever reviewed a monthly statement only to catch your bank hitting your account with charges that seem pretty frivolous?

Fees vary from bank to bank, of course, but they always seem to tap your account when you least expect it. Before you realize it, you can find yourself losing a significant amount of money just from the accumulation of all these pesky charges.

Thankfully, increased competition in the financial sector has resulted in banks trying to outdo each other in abolishing fees. For example, some companies now offer no-fee debit cards, checking accounts, and unlimited ATM services. There is an increased realization that consumers are working hard to build up their accounts and unwilling to tolerate unexpected bank charges.

You can avoid getting nickel and dimed by your bank. It’s primarily a matter of paying attention to the fine print and shopping around until you find something that suits your needs. Here are the categories you need to keep an eye on.

Monthly Maintenance Fees

Many banks, though not all, charge a monthly maintenance fee. Also referred to as a minimum balance requirement, this fee typically ranges anywhere from a few dollars to $25 or more. Most often, you’ll discover you’ve been charged this fee whenever your account drops below a specific amount. Fortunately, monthly maintenance fees are easy to avoid.

The most obvious way to avoid being charged this fee is to maintain the minimum balance. Sometimes, however, that’s just not possible, especially when money is tight. Many institutions will waive this fee when you agree to set up a monthly direct deposit to your checking account.

Another way to avoid paying this fee is by simply doing some research before choosing a bank. There are many banking options available to you that don’t charge these monthly fees. So don’t allow yourself to feel trapped, thinking this is the status quo at all banks.

Overdraft Fees

If you make a $100 purchase and only have $75 in your account, it’s highly likely that you’ll be charged an overdraft fee.

Along with minimum balance requirement charges, overdraft fees are another way banks hit you with miscellaneous charges. These fees, on average, cost approximately $35 for each overdraft. Overspending your account is an easy mistake to make, but it’s a costly one that hits right when you can least afford it.

To avoid this fee, prepare a realistic budget so you know how much money you have available to spend each month. You should also monitor your available balance frequently, so overdrafts can’t take you by surprise. Lots of banks offer an app that allows you to check your balance anytime, anywhere using your smartphone.

Many banks also allow their customers to sign up for overdraft protection. That way, should you overdraft, your bank will pull the missing funds from another account. Overdraft protection can be tied to a savings account, a second checking account, or even a credit card.

ATM Fees

Have you ever needed cash in a pinch but were nowhere near one of your bank’s ATMs? Using an out-of-network ATM can result in two charges — one from your bank and another from the out-of-network bank.

On average, a charge for using a non-network ATM is somewhere between $2 and $5. Some banks will refund the chargeback to your account, but avoiding the hassle in the first place is a better option. One way to avoid ATM charges is to get cash back the next time you’re shopping for groceries using your debit card.

Most banks also include ATM locations on their app. So the next time you’re out and about and in need of cash, make a habit of consulting your app. There’s no need for you to pay these charges if your bank has an ATM nearby.

Inactivity Fees

You can get charged for spending more than you have in your account. You can also get charged for not using your account at all. For example, maybe you opened an account back in your college days and forgot to close it after graduation. Now, years later, you discover that you’re being charged to maintain an account you no longer need or use.

Whatever the reason, inactivity fees can sneak up on you. Typically, if your account goes dormant for six to 12 months, you can expect to be charged for this hiatus. This fee can range between $10 to $20 and will be charged monthly. If this is a forgotten account, you also risk overdraft and insufficient funds, adding even more fees to your account.

There’s a simple solution for this problem, however. Logging into all of your accounts regularly or just buying groceries with each account every so often will eliminate this fee. Many banks will alert you if your account hasn’t been active for a long period of time. Keep an eye on your mail and e-mail — even the spam folder — to make sure you don’t miss these important messages.

When in Doubt, Shop For a New Bank

The days of being limited to your local hometown bank are over. From credit unions to online banks, your banking options nowadays are seemingly endless. Take advantage of these increased options when you’re looking for a financial institution.

Before you withdraw your money, make sure you’ve chosen a bank or credit union that offers the features most important to you. Many online banks, credit unions, and even regional banks offer several benefits. A little research will go a long way toward protecting your account from hidden charges.

Some banks charge a closing fee that can cost, on average, approximately $25. This fee is typically assessed if your account is less than 90-180 days old. Banks use this fee to deter account holders from joining only for the new customer benefits. If you’re considering changing banks, call a customer service representative to make sure you won’t incur this fee.

Frivolous account fees typically show up at the worst times and, more often than not, target those who are already struggling financially. By doing some budgeting and research, you can take control of your finances and avoid getting nickel and dimed by your bank.

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