In the coming year big banks are ready to collect over $30 billion in fees. Most likely you are contributing to that figure. Here are some questions you should be asking to at least reduce if not avoid these charges.
What are the minimum account balances required to avoid fees?
Banks would rather not deal with small accounts due to the reduced profits made relative to high balance accounts. Some times they are actually trying to close out existing low balance accounts by implementing or raising fees or account minimum balance. However, there are banks who welcome small accounts but you should always be careful to never let your daily balance drop below the stated minimum for even a single day. This can be enough to trigger the monthly maintenance fee even though the balance was below minimum for just one day.
Is overdraft protection available?
If your bank offers overdrafts protection, it may be wise to enroll and it is often free. This type of program will cover an auto-pay bill up to a specified amount when the account is overdrawn. Most of the time this type of program has another system in place. You may have a savings account or maybe a retirement account associated with your checking account. If you write a check that overdraws the account, money from the other associated accounts will be automatically transferred and will save you the penalties and headaches of a bounced check.
Not all banks offer this service. Those that do may require you to sign up specifically for it, while others may automatically enroll you when you open your account. Always check the fine print regarding charges and fees.
Does the bank offer a line-of-credit?
If your bank does not offer overdraft protection or you would rather not enroll in that type of program you might ask if you can get a line-of-credit linked to your checking account. The big difference here is that your checking account is not linked to any of your other accounts. It is a loan from the bank!
There are usually fees with this kind of service, but it automatically adds money to your account to cover the overdraft. You can also use it as a loan. With that said, you will need to fill out a loan application and go through a credit check. Once approved the line-of-credit will be attached to your account for as long as you prefer and if your income is high enough can be quite significant. Remember, when you decide to use the money from a line-of-credit you will be charged interest on that amount until you pay it back.
Are there ATM fees?
When you need some cash your first instinct is to visit an ATM. There are over 400,000 of them in the US alone. But we all know the catch. If you use an ATM not owned by your bank you will probably owe a fee. Sometimes as much as $3 for a single transaction.
Remember to ask about these fees. Is the bank part of a bigger network of ATMs where you don’t have to pay any fee? Is there a limit to the number of withdrawals per month? Is that number different for the network compared to the banks own ATM? Is there a limit on the amount either per transaction or per month? This is you money and you deserve answers. A wise consumer will always get as much information as possible before making a commitment.