Banks simplify the way you handle your money and make bill paying easy, but they charge fees for many services. A bank may charge you for using an ATM, for using a human teller or even when you deposit someone else's bad check. Fees could very well eat up any money you accrue in an interest-bearing checking account. However, there are several ways to save money by avoiding bank fees.
Banks will nail you for large fees if you write checks on an overdrawn account. But the overdraft charge -- usually more than $30 per check -- is just part of the story. If you don't pay the overdraft and bank charge within a few days, the bank might add another "sustained overdraft" fee. In addition, banks can allow payment for larger checks and let smaller ones overdraw, bringing in additional fees. It's maddening enough if your paycheck bounces, but some banks will charge you a fee for depositing that check.
Unless you take money out of your own bank's ATM, expect to pay some fees. Often both banks -- yours and the one who owns that machine -- will charge you for using it. If this is a problem and you need cash, save that for when you go grocery shopping. By asking for additional cash above the amount of purchase, you can usually skip the ATM fees. In fact, as more merchants accept debit cards, you may find you don’t need to carry much cash at all.
Some banks may charge for using a teller, and most will encourage you to do all your transactions electronically. The bank may even offer cash incentives to switch over to their in-house auto-pay systems. However, you must watch your balance when bills are due, or the bank may go ahead with the automatic payment and stick you with an overdraft fee later. Weigh the advantages of auto-pay against paying your bills online with a debit card.
Rethinking Paper Checks
Ordering paper checks, even the generic ones, can get expensive. However, as more merchants get on board with electronic payment systems, you may find you write fewer checks. It might be worth it to not even bother ordering paper checks. Even if you write one physical check per month -- like to your landlord -- consider getting some unmarked temporary checks the bank issues when you open an account. If you use your debit card or pay your bills online, you can squeeze a lot of use out of your temporary checks.
Know Your Bank's Charges
Although it may be hard to keep track of them all, it helps to know what your bank charges for services. Sometimes it's inevitable you'll be stuck with a charge on some transactions, but knowing the fee schedule will help minimize or avoid them altogether.
If your bank sticks you with a lot of unnecessary fees, you may want to think about switching banks. Most credit unions have free checking and more manageable fees. Some online banks, while not having their own ATMs, will reimburse you for any charges when you use someone else's machine.
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