Overdraft charges, out-of-network ATM fees and other fees are big business for American banks, to the tune of $42.3 billion for the year ending on June 30, 2015, according to analysis from Moebs Services, which collects and analyzes data on financial institutions. Fees have only gotten pricier in 2016. The average out-of-network ATM fee rose from $4.35 last year to a record high of $4.57, according to a survey conducted by Bankrate.com. That’s like paying an 11.4 percent tax on a $40 ATM withdrawal, but instead of your money going to fund schools, roads and police, that tax fattens the bottom lines of some of the nation’s richest corporations.
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If you’d like to keep more of your money in your wallet — and not in your banker’s wallet — get informed about your bank’s fees and policies, and get proactive about your banking habits and practices.
1. Examine bank statements. Balancing the checkbook by hand is a thing of the past. These days, more and more of us use our bank’s online or mobile bill paying and account management tools. That convenience, however, comes with a price. It’s easy to let our money run on autopilot and skip the close examination necessary to catch fees and service charges. Over time, ATM fees, account service fees and all the rest can add up to hundreds, even thousands of dollars. A few moments spent browsing your transactions online can alert you to fees and charges you weren’t aware of — or didn’t know you agreed to.
2. Compare banks and services. It isn’t unusual to become comfortable with the banks and financial institutions we are familiar with. To avoid the potential of being overcharged for basic services, compare rates at competing banks and credit unions at least annually. If you discover that your bank is overcharging you or that certain features cost more than they do elsewhere, contact your bank and ask for those fees to be reduced or eliminated. Be prepared to change banks if customer service is not cooperative. Fortunately, most banks would rather keep you than see you leave and should be willing to work with you.
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3. Pay attention to overdrafts. Because overdrafts can be embarrassing and frustrating, consumers often choose to “opt in” to their bank’s overdraft protection service — and thereby agree to pay any associated fees. While overdraft protection may seem like a friendly service offered by the bank, it’s also a money-maker. The Consumer Financial Protection Bureau has found that majority of debit card overdraft fees are incurred on transactions of $24 or less and that the majority of them are repaid within three days. Given that the median overdraft fee is $34, this amounts to a three-day loan of $24 with an APR of 17,000 percent. Fortunately, consumers can avoid this by paying attention to account balances and by deciding not to opt in to the overdraft protection service in the first place. In that case, if you do overdraw an account, the bank will refuse the transaction. Embarrassing, maybe, but not as embarrassing as paying 17,000 percent interest on a three-day loan.
4. Check credit reports. The recent revelations that employees of Wells Fargo Bank opened millions of unauthorized deposit accounts in customers’ names and then transferred funds into those accounts from customers’ real accounts, triggering overdraft and other fees is a shocking reminder of how important it is to check credit reports regularly. While this particular scam is unlikely to occur again, others certainly will. A regular review of your credit reports may help you uncover banking or other accounts that you did not sign up for or agree to — and which may be costing you money.
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5. Ask questions. Finally, if you find any fees or service charges on your statements, credit reports or other documents that you didn’t approve, contact a bank representative for an explanation. Often, we see a small fee or surcharge and think nothing of it. Resist the temptation to be complacent. Over time fees and charges add up. By contacting the bank, you’ve taken the first step toward re-negotiating those fees — or alerting them that you are onto their scam.
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Is Your Bank Overcharging You? originally appeared on usnews.com
