Bank Change: Tip-of-the-Day #60


Switch banks if you’re getting hit with gratuitous service charges and banking fees.

Some banks charge a hefty sum for using an online bill pay feature. I know Wells Fargo charges $6.95 every month and that adds up to more than $80 a year! Then there are fees every time you want to use an ATM outside of the Wells Fargo network - $2.00 last time I checked and the accommodating ATM charges an additional $1.50 (or more!) which puts you in the hole $3.50 over what you're already withdrawing! (It's enough to make you want to keep your money in an electronic money jar!).

And, depending on the type of account you have, you may even be charged if you want to go inside the bank to transact with a teller! I don't know if that's still in practice because I stopped going inside after the first surprise fee on my statement - but you can find a bank that is more generous in today's tumultuous economy.

Historically banks made their profit on the difference between interest paid depositors and interest charged to borrowers. But over the past few years, as interest rates have fallen and competition for loan customers have increased, banks have started to rely more on another stream of income: fees on everything from ATM usage to overdrafts.

Start by trying to find a bank that offers free checking with no minimum-balance requirements. Several banks offering such accounts include Chase, Commerce, and Wachovia.

Then, be sure to employ some helpful tips if your bank does charge for ATM or overdraft (ugh!):

Tip 1: Use your debit card for cash if you can't find one of your bank’s ATM machines. Use your debit card for a purchase (at a supermarket for instance) and ask for cash back. Your bank shouldn't charge you for a cash-back transaction, but at most it could be 25 or 50 cents, which is a lot less than the $2 or more they charge to use another bank’s ATM.

Tip 2: Make sure you have the right overdraft protection. Many banks charge $30 or more in penalties if you bounce a check or pay a bill online and go over your limit, but it only costs $10 (or less) to automatically transfer money from your savings to your checking account to cover it with overdraft. Make sure your overdraft is linking to a savings account and not a line of credit or credit card because then you'll be hit with interest charges to boot!

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