With increases in regulations over the past few years, banks are increasingly looking at ways to increase their revenue streams. Changes are likely to continue, given the creation of the Consumer Financial Protection Bureau (CFPB) and their overall watchdog role. Banks are likely to continue finding alternate (and increasingly subtle) ways to obtain more money from you.
Because of this, it is very important to read all the notices that you receive from your bank. Most of us have a tendency to glance at them and file them, perhaps in the circular file also known as a wastebasket. By not reading them in detail, you may not be aware of a change in overdraft fees or other charges that can catch you by surprise. The bank is obligated to notify you, but not to verify that you read the change. That is your responsibility.
There is a long list of relatively simple things you can do to make sure you are getting the most out of your bank account for the least amount of fees, including:
- Free Checking - See if you qualify for a free checking account. Many of them are very basic but may fit your needs. If you write a significant number of checks, see if the cost of the checks themselves can be included. If your checking isn't free, keep your check writing to the bare minimum. For example, you can pay most bills with a credit card and pay off the balance each month with just one check.
- Link Your Accounts – If you can, link your savings and checking accounts to avoid potential overdrafts. Alternatively, if a suitable interest rate and features are available, go with a checking account straightaway (no savings).
- Understand Your Bank's Fee Structure – Banks should provide you with a listing of the fees associated with different accounts, as well as general fees. Take the time to learn the ones that apply to you.
- Stick with Your Bank's ATM's - Avoid ATM fees by using only the ones from your bank; other banks will charge an access fee to use their ATM. Consider switching banks if the ATM locations are not convenient.
- Limit Withdrawals Through Planning – Proper budgeting and planning of cash purchases can limit your ATM transactions. If you have a debit card, you can also pay for merchandise at some merchants and elect to receive cash back without charges.
- Shop Around - Don’t be afraid to shop around for programs (like senior or youth discounts), or ask if any fees in particular can be waived or reduced — especially if they are for services you have never used. The worst that can happen is the banker can say “No.”
- Use Online Services – Most banks prefer you to use their online services whenever possible; it keeps their expenses down and it's convenient for you. Direct deposit with your employer is a great example. However, check with your bank to see if any of the online transactions do charge a fee.
- Avoid Overdrafts – Obvious advice, but this is easy to do with automatic payments linked to your debit card. Overdraft protection fees are better than overdraft penalties, but if you are diligent, there is no reason for either.
- Set Up Alerts - If your bank allows this, set up e-mail or text alerts if your balance goes below a certain amount. Set up a cushion amount of cash to serve as a buffer and avoid overdrafts.
- Check Processing Times - Be sure to know the processing periods for deposits. In other words, avoid overdrafts by making sure any recently deposited funds are available to you before spending them.
- Check Your Balance Regularly – This is the simplest but most important advice of all. Like other businesses, banks make mistakes, but it is your responsibility to catch them.
We recommend sitting down with your banker at least annually. Go through your accounts and the fees you have paid to the bank. Often, they can make suggestions, such as notifying you of alternative programs that can save you money. The less money you give to the bank, the more you get to spend on other things you desire.