Avoid Hidden Banking Fees
How to save money on bank services.
If you feel it's time to find a new home for your funds, you're not alone. Seventy-one percent of Americans are considering breaking up with their bank, with almost half citing high or hidden fees as a reason. Before you do some money maneuvering, consider our expert advice you can literally take to the bank.
Primary interest: The typical checking account has 30 fees. One of the most common is the overdraft fee, which averages $32. Once your balance dips below zero, you could be charged for every transaction. Opt out of overdraft coverage so that the purchase is simply rejected, advises John Gower, senior analyst for NerdWallet.com. Bounced check, aka NSF (non-sufficient funds) fees, are charged when a check exceeds the available balance. They can set you back $27 to $35 per transaction, and the business you wrote the check to can charge as much as an additional $35. Sign up for email and text alerts to notify you when your balance is low. Another wallet zapper: The cost of using out-of-network ATMs is on the rise. It's $2.55 on average, plus your bank may charge a penalty. But it is actually still possible to get free checking: Just under one-third of accounts don't have monthly maintenance fees (usually around $12.50), says Richard Barrington, senior financial analyst at MoneyRates.com. The trick is knowing where to find them—credit unions are often the best bet. And several banks waive fees if you set up direct deposit or maintain a minimum balance.
Online options: While online banks are more than twice as likely to offer no-charge checking, inquire about their ATM policies since most don't have physical branches. Ally Bank allows you to use any ATM nationwide and credits fees back to your account. Similar programs are offered by USAA and Bank of Internet USA.
Primary interest: Even basics like receiving paper statements often have additional charges, around $2 to $3 a month. Banks are required by law to notify you via mail before changing or adding various fees, so read everything. If you don't understand the legalese, call your local branch and ask for clarification. Watch out for charges associated with falling below a minimum balance. "When you're shopping around for a savings account, always know how much you're required to sock away," says Barrington, "since rates and fee schedules may have several tiers to them."
Online options: Banks on the web tend to offer the best interest rates, says Barrington.
Primary interest: A CD (certificate of deposit) is great for keeping savings out of reach, but if you have to withdraw your funds early, that will often set you back three to six months of interest, plus sometimes 3% of principal. Before you commit, be sure you won't need access to your cash, and read up on any potential fees in advance. Even though banks are required to notify you of the date your CD matures, mark it on your calendar. Otherwise, the CD may renew automatically if you don't take action. One month before, start shopping around for better terms. "A common mistake is allowing CDs to roll over when you really should make an informed decision each time," says Barrington.
Online options: EverBank's MarketSafe CD is tied to the performance of the market. "This gives the depositor some potential upside beyond normal interest rates," says Barrington, "but the risk is that if the market is down, you might not earn anything over the term of the CD, though your principal may be protected."
Originally published in the June 2014 issue of Family Circle magazine.