People often complain about hidden bank charges. All of these surprise fees that end up unexpectedly on their statements and add up quickly to more than they have planned to pay for their credit cards or bank accounts.
Although some banks may not clearly state their costs and fees, understanding the typical charges that a bank may require can help you avoid them and select bank products that are within your means. This is a step that you can take initially when you’re opening a bank account to make sure that you’re getting an affordable account.
Even afterward, you must keep an eye on bank notices — those are typically enclosed with your bank statement — to make sure that fees and charges are still within your comfort zone. If not, you can change account type or switch banks altogether.
Here are a few common charges that you should always know.
Account maintenance fee
That is typically a flat fee that will be charged monthly if your account isn’t sufficiently active, which is relative from one bank to another. So to avoid it, you simply need to know what your bank is looking for in terms of activity. For example, some banks will require a certain number of direct deposit, teller or ATM transactions per month to waive it.
Other banks may waive it if you maintain a certain amount of money in your account. This fee also may be waived if you’re a student or on certain types of accounts — like payroll accounts. So your goal is to know exactly how to avoid this fee or if you can qualify for an account that doesn’t include this fee structure to start with.
Overdraft fees
If you’re running paycheck to paycheck, you can easily overdraft your account — that is when you exceed your balance while withdrawing cash or buying something using a debit card. Banks will either have a flat fee that gets immediately added to your negative balance, or decline your transaction because you don’t have sufficient funds. Which one applies to your account? You will need to know that upfront.
If your bank gives you a choice, it is your call to decide whether you’d like to take the risk of paying an overdraft fee for the peace of mind that you will be able to get some cash if you’re stuck somewhere with no other option. The alternative will be to have your purchase or ATM transaction declined, which alerts you to the fact that your account doesn’t have sufficient funds.
ATM fees
These are common fees that a bank would charge you if you use another bank’s ATM. And these charges can easily be avoided by simple planning and selecting a bank that has an accessible network of ATMs.
Most banks list their branches and ATM locations online. They also may list any other banks’ ATMs that can be used at no charge. So if you’re in the market for a new account, make sure your bank has a convenient and accessible branches and ATMs.
Other fees
There are many other bank fees that you may not know about until you need a service. For example, banks may charge you for statement requests, checkbooks, etc. Wire transfers whether sent out or received typically have significant charges. Returned checks often involve fees. The point is: Always familiarise yourself with your bank’s fees and ask when you request a new service. If the bank charges strike you as too high, shop around and see how much other banks charge for similar services.
If the service you’re looking for turns to be recurring, then it makes sense to either to switch banks or just find another provider for this service. Wire transfers are a good example of how charges can vary dramatically among banks, exchange offices and specialised money transfer offices. So shop around.
The writer, a former Gulf News Business Features Editor, is a Seattle-based editor.
Not-so-hidden charges
Ask your bank about common fees
Shop around if they seem high
Find ways to avoid fees
Know alternatives to certain services
— R.O.
