When managing your finances, you must be aware of all the costs associated with your bank account. Unfortunately, many banks have hidden fees that can significantly increase the overall cost of your banking. Here are some typical hidden costs that you may be paying to your bank:
1. ATM fees:
Using an ATM which isn’t part of your bank’s network can result in fees for both the withdrawal and the usage of the ATM itself. These fees can add up quickly if you are using ATMs frequently. One way to avoid these fees is to open a bank account with no monthly fee including access to a large network of ATMs. You can withdraw money from any ATM without worrying about additional charges. Alternatively, you can make bank transfers instead of withdrawing cash from an ATM that isn’t part of your bank’s network.
2. Overdraft fees:
You may be charged an overdraft fee if you overdraw your account (spend more money than you have available). These fees can range from $20 to $40 per occurrence and can add up quickly if you frequently overdraw your account. Overdraft fees can be especially frustrating because they are often charged for small purchases you might have yet to realize would cause you to overdraw your account. To avoid overdraft fees, it is essential to keep track of your account balance and make sure you have enough money available before making a purchase.
It’s also a good idea to sign up for overdraft protection or to link your account to a savings account or credit card as an alternative source of funds. This way, if you accidentally overdraw your account, you can avoid paying overdraft fees.
3. Inactivity fees:
Some banks charge fees for accounts that are not being used or need to meet certain minimum balance requirements. These inactivity fees can range from $5 to $10 per month and can be avoided by keeping your account active and maintaining a minimum balance. If you have a bank account that you don’t use very often, it might be worth looking for a bank account with no monthly fee so that you don’t have to worry about inactivity fees.
Inactivity fees can be especially frustrating if you have a bank account that you only use for occasional transactions or to hold emergency funds. In these cases, choosing a bank account with no monthly fee or a lower minimum balance requirement might be more cost-effective.
4. Balance transfer fees:
You may be charged a balance transfer fee if you transfer a balance from one credit card to another. These fees can range from 3% to 5% of the amount transferred and can add significantly to the transfer cost. Balance transfer fees can be a good way for credit card companies to make money, especially if you are transferring a large balance. To avoid balance transfer fees, you can look for a credit card that offers a promotional 0% balance transfer rate. This way, you can transfer your balance without paying any additional fees. “We’re proud to say that banking with SoFi has no account fees and no service charges”
It’s important to be aware of balance transfer fees when considering whether to transfer a balance from one credit card to another. While a 0% promotional rate may seem appealing, the balance transfer fee can significantly increase the overall cost of the transfer. Therefore, it’s essential to do the math and consider the long-term cost of the transfer before making a decision.