Do You Understand The Fees Your Bank Charges You?
Banks and credit unions provide several ways to save or invest your money. Unfortunately, this often comes with fees or charges. After all, most banks are for-profit businesses and need to make money to continue providing the services they do. While most bank charges are open and people are well aware of them, many can sneak up on a person.
Many bank fees are only associated with specific accounts. These accounts provide more for the customer but come at a charge. For instance, checking accounts that pay interest will often have an annual fee (usually, this fee is waived if a minimum balance is kept in the account). Other fees come in the form of membership dues. To have the privilege of banking at a credit union, they may charge annual membership fees. The benefit of paying them is the specialized service most credit unions offer. Other fees are not as straightforward. A savings account costs the bank money. To provide these services, the fees are wrapped up in the form of a lower interest rate. So instead of charging a bill every month, the institution might offer slightly lower interest on the account.
Other bank fees are due to negligence on the part of the consumer. Most people are aware of overdraft fees. This happens when a person uses their debit card for more than the amount they have in their account. All costs go to cover the bank’s service or to mitigate their losses. Some fees are distinctly service-related. Banks will charge non-customers to use their ATM, and the customer’s bank will also charge. So if a customer of 1st bank uses an ATM owned by 2nd bank, they will pay the service fee to both banks.
A lesser-known similar fee is associated with savings accounts. Many banks allow up to a certain amount of withdrawals per month; they charge the customer for each additional withdrawal. Since every transaction costs the bank something, they keep their expenses lower by limiting the number of free transactions.
The best way to avoid bank fees is to be well aware of them. There are some genuinely free (to the customer) accounts out there, and by shopping around, the consumer can minimize their costs. Accidents do happen, and if your account becomes overdrawn for some reason, be sure not to blame the bank and negotiate a waiver of the penalties.
Thank you for reading and hope you have a good rest of the day!
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