How To Reduce Bank Fees
By Jeffrey Strain
Nobody likes to pay banking fees, but if you aren't active in
trying to reduce them, you are probably paying more in fees than you need to be.
One of the most important actions to take in order to reduce the banking fees is
to figure out exactly how you use your bank. Consider what your average balance
will be and how low the balance may dip. Also consider the type of transactions
you make and what types of services you need. Once you have a better
understanding of how you utilize the bank, you are in the position to get the
most out of it while avoiding fees for services you don't need or use.
Probably the best move you can make is to try and qualify as a
member of a credit union. Credit unions are not for profit organizations meaning
they don't have to worry about making a profit. The qualifying factors to join a
credit union vary from institution to institution, so you will need to check
with each. The good news is that there are a large number of credit unions
associated with a wide variety of organizations. Qualifying for inclusion has
been broadened a great deal over the years, so it is much easier to find a way
Since credit unions are there for their members and not out to
make a profit, they are much more likely to offer completely free checking or
free checking with a small minimum balance. In most cases, they also charge
lower banking fees and their interest rates on accounts are higher. The one big
drawback is that they tend to have fewer branches and automatic teller machines
(ATMs) than major bank networks which can be costly if you are an ATM addict.
You can begin your search to locate a credit union near you at the National
Credit Union Administration (http://www.ncua.gov/siteoutline.html).
If a credit union isn't a possibility, then you need to take a
look at the different types of banks. While the major banks will have a better
distribution of ATMs and a greater variety of services, their fees can be as
much as 50% higher than those of local banks. It is also worthwhile
investigating Internet banks since their fees still tend to be lower than those
of major banks.
Once an appropriate bank has been chosen, reducing the standard
fees they charge is an important. Although there are a wide variety of checking
accounts offered, most banks will offer at least two typical checking account
alternatives. A basic checking account will have a lower minimum balance
requirement, but it will usually have restrictions on the number of no cost
transactions you are able to make each month. A premium account will usually
offer interest and allow for more no cost transactions, but will require a
larger minimum balance to avoid monthly fees. Not meeting the requirements of
either of these can be quite costly, so it pays to chose the checking account
style that best fits your use.
Although an interest earning checking account seems like the
obvious choice to make, there are a variety of situations where you're better
off choosing a no interest checking account. If your account balance fluctuates
quite a bit so that you are likely to go under the minimum balance required for
the account even a few times during the year, you are likely to pay more in fees
than you will ever earn in interest. In addition, checking account interest
rates are some of the lowest, so choosing a checking account with no interest
and a low minimum balance can make sense if you can put the difference into a
higher yielding account.
Many people have several bank accounts at different
institutions. It sometimes make sense to consolidate them at one bank.
Consolidating your banking to one bank can give you more leverage in negotiating
fee reductions and allow you to be more proactive in getting the best deals
available. If you keep several different accounts at a bank, some banks will
take into consideration the total balance of all your accounts at the bank.
Although you may not have the minimum requirement in your checking account to
earn interest, if you are also keeping a large deposit in a CD account that more
than covers the checking minimum, the bank may be willing to count the balance
of the combination of accounts as meeting the minimum requirement.
Another option that can give you leverage when negotiating on
checking account fees is to have your paycheck direct deposited. Although every
bank has its own set of rules, most will waive the checking account monthly fees
if you direct deposit your paycheck. Don't, however, assume they will
automatically give it to you. Chances are you will have to politely ask before
they offer you this service.
A further possibility in getting free checking is to invest in
the bank. Although this doesn't work with the larger banks, some small to medium
sized banks have programs that award free checking and other special offers to
investors. All you need to do is purchase a single share of stock to qualify.
Copyright Jeffrey Strain - used with permission. Jeffrey Strain has
published hundreds of money saving articles and is the co- owner of
a website dedicated to saving you money.