Tips For Consumers
Here are some detailed tips on how to reduce the amount of fees you pay your bank.
1. Choose to bank at a credit union, instead of a bank. A credit union looks, smells and feels like a bank, and does most of what a bank does. It is different from a bank in that it is a not-for-profit organization, and it is owned by the member-depositors. Credit unions provide checking and savings accounts, credit cards, loans & mortgages, money market accounts, and certificates of deposit(CD's). Average interest rates for loans are lower at credit unions than banks, and average rates for deposits are higher. That is a better deal both ways. Most offer free checking with no minimum balance. Credit union deposits are insured just like banks'.
The biggest disadvantage of credit unions is that they don't have many branches, and rarely operate in more than one state. Many credit unions absorb the consumer's cost of using out-of-network ATMs, (and if not, at least at other credit union ATMs), so you won't pay more to access an ATM out of your area. If you need to transfer money to accounts in other states (like if you have kids in college), a large bank might be better. Also, credit unions are less likely to have the latest in banking technology-- iPhone check depositing, telephonic alerts-although they are catching up rapidly. Check with the National Credit Union Association to find out how to join a credit union in your area or go to findacreditunion.com.
2. Choose a local or regional bank. Smaller banks tend to be more consumer-oriented and many have better rates than the mega-banks. They don't have ATMs all over the world, but if you spend most of your time within a hundred miles of home, you don't need the extensive branch network of a big bank.
3. Look for "free checking" options. Totally free checking used to be easy to find anywhere, and while it's not going away it's not ubiquitous, either. You may be able to get free checking if you have your paycheck direct deposited into your account, and you can certainly get it if you keep a minimum balance. Look for checking accounts with a low minimum balance requirement. If you are keeping your savings in a regular savings account, consider using that balance to meet the minimum balance requirement for a free checking account. Savings account balances are pitifully low, so you're hardly losing by putting the money in a no-interest checking account, and you'll save on the monthly fees. Some banks/credit unions offer free checking for seniors or students.
4. Pay attention to ATM and debit fees. As long as you use your bank's/credit union's ATM terminals it won't cost you anything, but if you use another bank's or other owner's ATMs you may have to pay two fees: an "off-us" fee to your bank and a surcharge to the other owner. Some banks and credit unions may waive all or part of these fees, but often only on premium accounts. Watch out for annual fees on ATM cards.
5. What about bounced check/debit overdraft protection? Banks made a lot of money on debit card overdrafts. Now they have to ask you if you want "overdraft protection," which means you'll pay $25 or more if you use your debit card for more than is in your account. Many banks and credit unions have a much cheaper overdraft protection system. Either you can have a savings account where any overdrafts are automatically transferred (watch for fees on transfers) or you can get an automatic loan at moderate interest rates, and pay it back within a few weeks. A loan of $50 for five weeks at 10% interest is only fifty cents!
6. Bank electronically. Some banks charge less if you have your statements "sent" to you electronically, or if you don't have your checks returned to you. Some charge for seeing a real live teller. If you are comfortable banking online, you can save.
7. Check out Internet banks. There are banks that have no brick-and-mortar offices and advertise lower fees. Be sure to check these out if you are comfortable banking on the Internet and not ever dealing face-to-face with a person.
8. Choose the least expensive plans. Banks will typically have more than one type of checking account. The more expensive account will have more services (interest paid, more no-cost transactions), but require a higher minimum balance. If you only write a few checks per month, you won't save much if the check-processing or check-printing fees are low. See which account works best with your lifestyle.
9. Don't just choose the interest-bearing checking account. Interest rates are so low that it may not be worth getting interest at all. As an example (fees and rates may have changed): Bank of America's FirstChoice Gold™ with Tiered Interest Checking pays 0.08% if you keep a minimum balance of $10,000. That is only $8 per year! You could instead use $8500 of that $10,000 to buy a certificate of deposit (CD) from Discover Bank at 1.3% and have a minimum balance of $1500 with B of A's MyAccess Checking, no monthly service charge, and earn over $100/year in interest from the CD.
10. Direct deposit your paycheck. Most banks charge lower fees to depositors who have their paychecks deposited directly into the account. This costs nothing and will save you money.
11. Sign up for alerts. Some banks will send a text message to your phone or an email to tell you what your available balance is or when your balance drops below a limit you set. That way you can avoid bounced checks or debt card overdrafts. You can also set up alerts on your credit card to tell you when your payment is due or if you are close to your credit limit. Many banks/credit unions offer such alerts free of charge.
12. Combine bank accounts. If you have more than one type of bank account/product (checking, savings, CD, investment account), ask your banker if the amounts can be combined and counted toward your required minimum balance.
13. Read your mail. New regulations require banks to notify you of new fees. Banks will be trying all sorts of new ways to make money this year, including changing the terms of what you've already got. What might look like junk mail could be a notification.
14. Ask how to avoid fees. In this new banking environment, banks are introducing all sorts of programs to encourage people to bank with them. Ask about how you can lower your fees - online bill paying, direct deposit of paychecks, savings accounts, and using your debit card are just some of the possibilities.
15. Who's got your mortgage? You may get the best deal on account fees from the bank carrying your mortgage or your car loan. Ask your banker.
16. Watch for new debit card fees. Some banks will be charging monthly fees for debit cards, often waiving these fees if there is enough activity on the card. Check what the deal is with your bank.
17. Make noise. Sometimes you can get a better deal at a bank just by asking for it. The new rules are going to make banking more competitive, so banks will be willing to work harder to hang onto customers.
18. Comparison shop. There are several online sites where you can compare banks (bankrate.com, moneyrates.com, findabetterbank.com, bankfox.com, mybanktracker.com). Unfortunately, these often don't include credit unions. Use them as a start. Then, call around, or check the web sites of your local banks and credit unions. You may be surprised to see the number of different rates, plans, and choices there are.
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