It’s getting costlier to access your own money, at least in the United States, according to a new study released earlier this week that showed ATM fees have become a lot more exorbitant in recent years.
Bankrate.com published the findings from its new report that found American consumers will pay about five percent more this year just to access their funds on an ATM that is not affiliated with or owned and operated by their respective financial institution. On average, a customer will pay $4.35 for each transaction.
Overall, ATM fees have skyrocketed 23 percent in the past five years.
“Punitive-type fees, such as ATM fees and overdraft fees, have shown the most consistent increases over time,” said Greg McBride, CFA, Bankrate.com’s chief financial analyst, in a statement. “While this trend is unlikely to reverse, consumers should recognize that ATM fees and overdraft fees can be avoided completely.”
Financial experts cite two reasons for this dramatic increase: the first is that consumers are becoming smarter about their bank accounts and are trying to avoid these types of erroneous fees as much as possible so banks are responding with higher charges. The second is that financial institutions are relying more on fees for their revenues due to higher regulatory costs and lower interest rates – overdraft fees, for instance, are a $30 billion business.
How can you avoid paying these excessive banking fees? Here are four ways to do so.
Overdraft fees
It is estimated that one-third of American consumers maintain an overdraft account and pay on average $225 per year. This type of account feature is meant to cover rent checks, automatic withdrawals and other expenses if your balance is limited. With an average overdraft fee of $32.74, it must be avoided entirely.
This can be done by monitoring your bank account, coming up with a balanced budget approach to your monthly income and expenses and ensuring that there is always money in the account to cover your rent/mortgage, bills and utilities. The $225 price-tag can be better used to invest.
ATM fees
You need $20 quick, but your bank isn’t around your immediate surroundings to withdraw the cash. Instead of walking a few blocks – or even checking an app for a nearest branch ATM – you stumble upon a generic ATM and withdraw these funds, but pay an additional $4.35 just to access $20.
Avoiding this fee can be quite easy. After you receive your paycheck, take out money you’ll need to cover the next week’s expenses (groceries, bills, lunches, clothing, etc.) If you don’t have enough money before the week is up then that’s too bad. Try to do without. Or, simply enough, go to your bank and withdraw the money to avoid the fee.
Checking account fees
Are you paying $10 to $20 per month just to place your money for safekeeping, deposit your paycheck and pay your bills? Millions of consumers all over the world are doing so, but with a few requirements, this monthly charge can be waived. It may vary from bank to bank, but if you maintain a minimum balance, direct deposit or bill payment, then you can don’t have to cover the cost.
Check fees
Although we’re in the era of all things digital, we still need to use traditional banking methods like cash and checks, such as when we pay our rent. Oftentimes, checks are free when you freshly open a bank account. However, once those checks run out, then you could be stuck paying out around $20. The minimal cost can’t be avoided, but what you can steer clear of is paying for fancy checks (paper with designs on them), which cost at least $10 more.
Here is a tip to try, though: speak with your branch and explain to them that you have been a customer for such-and-such years and you would like to get a book of free checks. As one study found, if you simply ask a bank to do something for you, they’ll likely do it (so long as you’re a long-term customer and/or have an account in good standing).
It’s no secret that some banking fees can be outrageous, dubious and perhaps even unscrupulous. With that being said, there are many ways to circumvent paying these outlandish charges by incorporating some of the aforementioned steps.
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