If you hear someone complaining that a bank is "eating" all his or her money, it is usually because he or she is coping uneasily with a deluge of charges from the financial institution. Some of these bank charges can be quite high, while others would just shave a few dollars off your account balance at the end of each month, quarter or year. The most important bothersome bank fees include everything from ATM (automated teller machine) fee and foreign transaction fee to online bill pay and lost card fee.
This is the cost of using an ATM that does not belong to your bank or is owned by a financial institution that has no cost-sharing agreement with your bank. If possible, try to carry enough cash in your wallet, so that you would not have to withdraw money in an area not greatly covered by your bank, ATM-wise. Another option is to open an account with a top financial institution that has an expansive national ATM coverage. Before traveling, contact your bank's customer service and ask a representative whether the bank has ATMs in your destination area. You also can check that information online.
Foreign Transaction Charge
We all have been hit by this bank fee, and it often feels really painful, especially when you come back home from an international flight and start poring over your bank statement to figure out why you could not withdraw enough money at the airport for a homebound cab. You pay two types of foreign transaction fees when you spend money overseas: the exchange rate that invariably is advantageous to your bank and the other financial institution, and the fee assessed on the transaction itself – meaning, your bank is making you pay for using the card overseas and causing it to process cross-border payments or to deal with foreign merchants.
Hard Copy Statement Fee
You can easily avoid this bank charge unless you are not proficient with everything electronic. Banks make it very easy for customers to conduct all their businesses online, so talk to your financial institution to see what options are available to you. Your bank may charge you somewhere from $1 to $5 if you choose to receive a paper statement, which makes sense in a way because there are administrative and postage costs inherent in any activity that requires manual processing.
Electronic Bill Pay
Also called online bill pay, electronic bill pay enables you to settle all your invoices electronically. Most major banks offer this service for free, but it is not uncommon to find a bank that charges a small fee, say, $5 or $7, to process electronic bill payments on your behalf. Ask your bank if it provides this kind of service and, if yes, at what price.
Lost Card Fee
If you lose your debit card, your bank may assess a fee to reproduce and send you a new card. Check with the institution's customer service department to see how much you might be liable for if you want to get a new card, especially if you choose a rush order. Some banks charge anywhere from $5 to $10 to replace the card, in addition to the $15 to $25 you would pay to have the card delivered overnight.
This is a fee I have a beef with. Why should a bank charge a customer a fee if he or she does not use the account for a certain period, say, six to 12 months? The fact is that a bank incurs administrative costs to keep an account open, most of which touch on things like salaries paid to back office personnel as well as expenses related to sending monthly statements. Talk to your bank to learn more about inactivity charges and how you can avoid them. Typically, if you make a transaction, be it a small deposit or withdrawal, once a month, you should be fine and could easily avoid the charge.
Account Termination Fee
Also known as an account closing fee, an account termination fee is the last charge the bank assesses on your account, typically to cover administrative fees and, sometimes, legal and regulatory fees. The last case would occur if, for some reason, you and the bank are not parting ways amicably but rather are engaged in litigation. Contact your bank to see its account termination procedures and to determine the amount you would have to pay were you to close your account.
Minimum Balance Charge
This is another fee I have a problem with. The bank assesses a specific charge if one of three scenarios occurs: your average monthly balance does not meet the required threshold; your balance at the end of the month is below the minimum required; or the amount in your account falls below the minimum required at any moment during the month. To avoid this fee, a banker friend of mine suggests that you choose an account whose minimum balance requirement fits perfectly with your budget and meshes with how much you intend to keep at the bank.
Returned Deposit Charge
To me, this is one of the most unfair fees a bank would charge you. Essentially, you pay for someone else's mistake or action. You incur a returned deposit fee if someone writes you a check that ultimately bounces. You are not responsible for the nonsufficient funds (NSF) situation, but the bank somewhat faults you for causing its staff to spend time, energy and resources to do everything that must be done to process, clear and return the bounced check.
Check with your bank to learn more about its service requirements, including service fees, frequency and amount. Banks that charge a fee generally do so on a monthly basis, but it is not unusual to see annual service fees, similar to charges you would see with credit cardmembership fees. My banker buddy says the fee hovers around $10 per month and essentially is a maintenance fee a bank assesses to cover its basic operational expenses.
This charge is the opposite of a returned deposit fee. In essence, you pay it after writing a check that later bounces. To avoid this bank fee, check your account actual balance before writing a check. The word "actual" here is key, because you should not take into account deposits and other account credits that are still pending. You need to factor into your account balance these positive items that have already cleared.
This charge can be very steep and, at times, very profitable to banks. In essence, the bank allows an incoming item to clear but charges you a fee, which is currently $35. For example, say the bank grants you such a favor four or five times during the month; you would be left holding an overdraft fee bag of $140 or $175. To avoid this fee, do the same thing you did with an NSF fee: do not write checks that are worth more than your actual account balance.
Various bank fees are inconvenient, some just unfair, but you can make a few adjustments in the way you handle your account to reduce or even avoid these bank fees. Top bothersome bank charges run the gamut from overdraft fee and service fee to NSF fee, returned deposit fee, foreign transaction fee and hard copy statement fee.