Banking: How to Avoid Being Nickeled and Dimed

Banking has become a very important service in the modern world. Hiding cash-money in a mayo jar under the mattress simply does not cut it for a variety of reasons. Banking, either checking or savings accounts, is needed to receive direct deposits from jobs, transfer money electronically, or keep assets in a safe place backed by federal regulators. Think about it this way: if your mattress catches on fire, all that cash hiding underneath will burn away. However, if your local bank experiences a disastrous mishap, the digits in your checking account are going to stay the same.

Banking has its own set of problems as well: fees. The hidden and somewhat nebulous world of banking fees can cause many a headache when customers try to use their own money. These can include overdraft fees, maintenance fees, ATM fees, and even over-excessive use fees. All major banks (Wells Fargo, Bank of America, JP Morgan Chase, etc.) have fees of some kind to use their services.
Luckily, checking and savings accounts alongside the fees associated with them do not directly affect someone’s credit score. This is because these accounts hold real, actual money instead of fictional money (aka credit). Credit bureaus only check on someone’s credit history, not the money going in and out of a banking account. However, any credit card or loan attached to a specific bank will still show up on a credit report, so keep that in mind when you open a new line of credit with your preferred bank.

Luckily, checking and savings accounts alongside the fees associated with them do not directly affect someone’s credit score. This is because these accounts hold real, actual money instead of fictional money (aka credit). Credit bureaus only check on someone’s credit history, not the money going in and out of a banking account. However, any credit card or loan attached to a specific bank will still show up on a credit report, so keep that in mind when you open a new line of credit with your preferred bank.

Maintenance Fees

The most common fee most people will experience is the dreaded maintenance fee. The bank needs to pay staff, utilities, and infrastructure for their companies and networks, so they need to get money from somewhere. The maintenance fee is usually a flat rate (depending on the bank) that gets charged from either the checking or savings account once a month unless certain conditions are met. The fees can range from $5 to $10 a month.

Most banks will waive this fee if certain conditions are met. Check with your bank for the exact details, but there are usually two ways to avoid this fee: average monthly balance or consistent direct deposits.

If the balance of your account is above a certain amount, the bank will most likely waive the fee. For example, if Bank A requires a $500 minimum daily balance, the bank will waive the $5-$10 fee if the customer keeps their balance above that amount throughout the whole month.

Another way to waive this fee is to have a certain amount of direct deposits per month. Again, this may be something akin to a minimum of $500 a month of consistent direct deposits, so it’s a good idea to ask employers to do direct deposits as it may help waive the maintenance fee with the bank.

Sometimes certain banks may have other options to get rid of the fee as well. For example, some banks waive the fee if the customer is a registered student, under a certain age, or has their checking account linked to a savings account. This is something that’s different for each bank, so it’s best to look into the bank and its specific set of rules.

Overdraft Fees

The dreaded overdraft fee has hit millions of Americans every year. It has been so bad in the past that certain US laws try to curb the problem by forcing banks to have alternatives and ways for customers to avoid these fees.

An overdraft fee occurs when someone withdraws more money than what’s in their account; e.g., if Henry has $100 in his checking account but tries to write a check for $110, then the bank will hit him with an overdraft fee. The same goes for using a debit card; although some banks will prevent your purchase if that’s the case (and some don’t because fees make them money).

Sometimes life can be hectic and tough. The world can often seem malicious to people’s wallets when disaster strikes. Anything from someone who needs money to pay for his or her next meal to an elderly mother stuck in the middle of nowhere with a broken car, that financial gut punch hits hard.

Luckily there are ways to avoid the fees that may come with these fiscal downturns. The best way to avoid some of these fees is actually to use a credit card, but this can be tricky because then the card will incur interest instead. Luckily, those interest fees do not occur right away. If the person knows they can pay off that expenditure before his or her next statement, the fees can be avoided altogether. If that option is not viable, then most banks allow customers to link their checking accounts to their savings accounts. Allowing any overdraft to pull from the savings account and avoid being hit with an overdraft fee. After all, people low on money shouldn’t be punished further with more fees causing a perpetual downward trend of financial hardships.

ATM Fees

The convenience of withdrawing money from nearly anywhere can be both a blessing and a curse in our fast-paced world. With the advent of the COVID-19 pandemic, more businesses are accepting credit or debit cards for all of their transactions. This is due to how paper money can be unwieldy at times and the recent coin shortage causing problems.

However, cash is king. With cash, there is no fear of bouncing checks or the need to sign up for a new middle-man app to send money. That’s where ATMs still play a pivotal role in transactions. But be aware that not all ATMs are the same.

Most banks will charge a fee if someone tries to withdraw money from an ATM that’s not affiliated with the bank. There are many “universal” ATMs that will connect with nearly every bank in the United States; however, these ATMs will also usually charge a fee. Even worse, the fee is not consistent between these ATMS and may even be punishing at times.

Some ATMs will have a flat rate fee, usually in the range of $3 to $10. Other times, the ATM may even charge a percentage of the withdrawal amount (beware of these ATMs). This means if the ATM charges a 3% rate on withdrawals, someone who takes out $50 will be charged $1.50, but someone who pulls out $500 dollars will be charged $15 instead.

Be sure to examine the ATM and read everything that pops up on the screen. Again, by law, they must be clear and explicit on the fees and how much they are taking from someone who’s trying to get his or her own money.

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