There are different types of bank fees that you should be aware of. These include Dormancy fees, Overdraft Protection, ATM fees, and Insufficient funds fees. If you’re using your bank account, it’s essential to learn about these.
- Overdraft Fees
Overdraft fees are one of the most common bank charges for consumers. They range from small (one-time fee) to large (multiple daily or monthly payments).
Banks charge overdraft fees when you spend more money than your account has available. These charges can add up fast and put a dent in your budget. Thankfully, there are ways to avoid them.
One of the simplest ways to prevent overdrafts is to set up automatic transfers from another account. This can be a less expensive option than an overdraft. However, you should ensure the other financial institution will honor your request. Some banks will only allow you to make this type of transfer if the different account has an overdraft limit.
Many banks now offer overdraft protection. You can opt for this when you open a new account. It will allow you to access a loan if your account goes overdrawn.
- Insufficient Funds Fees
Insufficient funds fees are one of the most common hidden bank fees. It is common for people not to know they have incurred these charges until they receive a statement. However, you can avoid them.
There are many reasons why your account may need to be more funds status. These include automatic withdrawals, check payments, and debit card transactions. You can protect yourself from these by ensuring your account balance is up to date.
If you are not careful, you could end up paying a bundle of fees. The number of payments you will pay will depend on your account balance, banking institution, and location.
Many banks offer overdraft protection, which is a way to prevent insufficient funds fees. However, it would help if you choose whether you want to opt-in. Also, make sure you review the terms of your account agreement.
- ATM Fees
You probably heard about ATM fees if you are a bank customer. These fees can be confusing. However, you can avoid these charges by using the proper banking techniques.
An excellent first step to avoiding fees is understanding your bank’s policies. This will allow you to avoid common mistakes. You may get a fee waiver if you meet specific requirements.
One way to avoid these charges is to use bank-branded or network ATMs. Usually, banks partner with other ATM networks to offer fee-free withdrawals.
Another way to avoid fees is to ensure you have the proper balance. Generally, the minimum balance requirement for most bank accounts is $500 to $1,000. You can also find some accounts that waive these fees if you have a large balance.
- Dormancy Fees
There are many types of bank fees, one of which is the dormancy fee. These are usually assessed after a period of prolonged inactivity.
You might be surprised how much these fees can cost. For instance, the average consumer spends about $7 on monthly banking fees.
However, these fees can be avoided. You may save a few hundred dollars a year by shopping around for a better deal. Just make sure you read the fine print!
Another way to avoid these charges is to use an online bank. Many of them will reimburse you for ATM fees you incur when using an ATM at another bank.
The same applies to using a debit card or paying for your smartphone. This type of payment method will not only save you from making the drive to an ATM, but it will also prevent you from having to spend a chunk of change at the ATM.
Overdraft Protection
Overdraft protection is an optional service offered by many banks. It can be helpful if you frequently need to overdraw your account, such as in the case of an emergency purchase. However, it can also be expensive.
When you opt into an overdraft protection program, your bank will charge a fee for any transaction that results in an overdraft. The price is generally based on the amount advanced to cover a transaction. A typical overdraft fee is $34 a trade, but it can range between $237 and $439.
Overdraft fees are one of the most significant expenses for consumers with checking accounts. According to the Consumer Financial Protection Bureau, Americans pay about $17 billion annually in overdraft fees.
Despite the expense, overdraft protection programs are helpful and should be considered if you are at risk of going into an overdraft. However, the program should be reviewed carefully before you sign up.
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