When it comes to banking and finance, you may find yourself wondering how banks make money. Although most of this is made through loans and interests, banks make a lot of money through hidden fees. These often catch people off guard and sometimes put you in trouble. Here are seven hidden banking fees you may be experiencing and how to avoid them.
1. Monthly maintenance fee
Many banks only charge monthly fees, just to keep your account open. These fees can range from $5 to $25, and they will increase quickly over time. If you meet certain requirements, such as maintaining a minimum balance or setting up a direct deposit, some banks will give up these fees.
To avoid these fees, you should check your bank’s policies to see if you are eligible for the waiver. Maybe it’s worth considering moving to another bank. Online banks usually charge lower or no maintenance fees, which is a good option.
2. Overdraft fee
Overdraft fees occur when you spend more than the available balance, and the average bank charges $35 per overdraft. If you realize that the balance is low, these expenses may pile up.
If you want to avoid these fees, you should opt out of overdraft protection or link your checking account to an automatically transferred savings account. You can also set low-balanced alerts to keep how much money is in your account. In addition, some banks do not have overdraft fees accounts. So, you can consider whether switching overdrafts often have problems.
3. Atm withdrawal fee
Using an off-network ATM may cost you $2 to $5 per transaction. If you withdraw cash frequently, these fees may increase quickly.
Try using the bank’s ATMs whenever possible. Most institutions have an ATM locator that allows you to find an ATM near you. You may also consider withdrawing a larger amount to reduce the number of transactions. Some online banks also have larger free paid networks. Switching can save you money.
4. Paper statement fee
Many banks now charge $2 to $5 per month for mailing paper reports. While the expense seems small, it adds up over time.
Switching to e-statements can help you avoid this fee. Electronic statements are not only free, but are safer and more environmentally friendly. Most banks allow you to change your statement preferences through online banking. If you need paper statements occasionally, ask them as needed instead of paying a monthly fee.
5. Too much transaction fee
Savings accounts often limit the amount of withdrawals or transfers you can make per month. Exceeding this limit may result in $10 or more per additional transaction.
Always monitor your transactions and plan carefully. If you need frequent access to your funds, consider using a checking account. The budget app also helps you track and limit withdrawals.
6. Inactivity Fees
If your account is within a set period (usually 6 to 12 months), the bank may charge a fee. These fees range from $5 to $20 per month.
To prevent inactive fees, conduct small transactions or deposits regularly. Setting up automatic billing payments or transfers can keep your account active. If you no longer need an account, close it correctly to avoid unnecessary expenses. Look for banks that don’t charge no activity fees, especially if you have multiple accounts.
7. Wire transfer fee
Wire transfers can be expensive, with domestic transfers ranging from $15 to $30, and international revenues even higher. If you send money frequently, these expenses can cause significant financial losses to your finances.
Point-to-peer payment applications like Venmo, Zelle, or PayPal make wire transfer unnecessary. However, some banks offer free wire transfers to certain account holders, so be sure to check your bank’s policies. If not, you need to make a wire transfer, compare rates between banks to find the most affordable option.
Control your bank fees
There are a lot of hidden fees that can penetrate you when it comes to banking and financing. Make sure you understand the policies of your specific bank. Having this knowledge and being proactive will keep you from incurring unnecessary expenses. Ultimately, the money isalways Better pockets. With the right strategies and some plans, you can control and avoid these expenses.
