By Patti Ghezzi
With the banking industry so immersed in the hot mess that is the economy, I’m poring over my statements and rethinking whom I do business with. I hate fees, confusing language, and relentless marketing for services I don’t need. Mostly, I hate fees.
To help sort out my personal banking choices, I spoke with Greg McBride, senior financial analyst for BankRate.com. He noted that banks offer different types of accounts and each has its pros and cons, overt fees, and sneaky ones.
“When you’re choosing a particular account, make sure the type of account is a fit for your financial lifestyle,” he told me. By banking smartly, I can escape the dreaded fees, he says. And there are quite a few to look out for.
Avoid the Avoidable
Look first at the most ubiquitous charge. No matter what type of account you use, most banks will charge you for using another bank’s cash machine. Such charges have risen over the past decade and now average $1.97 for the bank that operates the machine, plus $1.46 from the user’s bank, McBride says. That’s almost $3.50 for a single withdrawal. If you do that twice a week, you’re wasting almost $30 a month.
To avoid the ATM double-whammy charge, research your bank’s ATM locations. “You’ll never have to make a withdrawal on someone else’s turf,” McBride says. He also recommends using a debit card that gives you a cash-back option to access your money when traveling.
Insufficient funds fee
Bounce a check and you’ll get hit with a monstrous charge. Even with overdraft protection, you’ll be gouged, but at least the bank will cover the amount. You won’t be charged by the business that took your check.
Keep track of your deposits and withdrawals, know how many checks you have out, and keep a buffer amount of money in your account to make sure you’re covered.
You’ll also be charged if you deposit a check into your account that’s returned for insufficient funds. Only accept personal checks from people you know and trust.
Get Wise to the Sneaky Fees
If you have an account known as an “express,” some banks will charge you just for walking up to the teller. This account is for customers who do most of their transactions online or at the ATM. This outrageous charge is less common these days, but make sure your account does not limit the number of free teller visits. A variation on this fee is the surprise charge for writing too many checks.
Some banks charge a monthly fee regardless of your balance, while others will ding you only if you drop below a minimum balance or go for a stretch—three months to one year—without activity. Check your bank’s policy if you expect to be out of the country or otherwise uninvolved with your account. Know the minimum balance and maintain it.
Account closed early fee
Yes, some banks will charge you for closing your account early, usually within three to six months. If you’re in transition, choose an account you can close at no cost.