Now is the perfect time to take a close look at the fees your bank charges you. It’s a great personal finance move for the new year, especially as inflation takes a bite out of consumers’ hard-earned income. Plus, two major banks just cut some of their hefty fees.
This week, Bank of America (BAC) – Get Bank of America Corp Report and Wells Fargo (WFC) – Get Wells Fargo & Company Report made huge changes to their fee structure.
Bank of America plans to end its $35 non-sufficient funds fee next month and will reduce overdraft fees from $35 to $10 starting in May.
Wells Fargo followed suit by announcing the end of non-sufficient funds fees by the end of the first quarter and the end of transfer fees for accounts enrolled in overdraft protection.
Last month, the Consumer Financial Protection Bureau (CFPB) issued a report finding that banks have a “deep dependence” on overdraft and non-sufficient funds revenue, which reached an estimated $15.47 billion in 2019, the latest figures made available by the agency.
The three banks named in the report — JPMorgan Chase & Co. (JPM) – Get JPMorgan Chase & Co. Report, Wells Fargo, and Bank of America — brought in 44% of the total reported that year by banks with assets over $1 billion, the CFPB report showed.
With this spotlight placed on bank fees, even if you don’t have an account with one of those banks, it’s time to take a look at your bank’s fee structure and see what that back account is actually costing you.
The average consumer pays at least $7 each month in bank fees according to a GOBankingRates survey. That can add up to $100 a year, even if you don’t have any overdraft charges.
Here Are the Most Common Bank FeesMonthly Maintenance feeMonthly service fee (checking)Non-sufficient fundsOverdraftTransfer from savingsWays to Save Yourself From High Bank FeesBank fees can snowball into thousands of dollars in lost savings. Here are a few quick tips on how to save money on those fees:
Utilize free checking accounts: The quickest route to savings is by finding no-cost checking accounts. And don’t just think about the big banks — small community banks and credit unions may offer lower fees.
Sign up for direct deposit: Many checking accounts are free when your paycheck or benefits check is automatically deposited each month. Plus, your money will be available immediately.
Keep multiple accounts at your bank: Many banks are looking at the entire customer relationship and may offer free services if you maintain checking and savings accounts with that bank, for example.
Use only your bank’s ATMs: Avoid fees by using ATMs owned or affiliated with your bank. There are also banks and credit unions that offer “fee rebates” that will reimburse you for using out-of-network ATMs.
Sign up for email or text alerts: Ask for an automatic alert when your balance falls below a certain level. This will give you a heads up to add more money to avoid overdraft charges.
Avoid a double-whammy: Be sure to avoid banks that charge you an additional “extended” overdraft fee that kicks in if you don’t pay the first overdraft fee within a certain period of time.