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Financial Tapping - Battling and Controlling Bank Fees

Jul 5, 2008
Banks offer us many convenient services, but they hardly do so out of the kindness of their hearts. Almost any little service imaginable that a bank provides has at least a small fee associated with it. These fees individually are usually small, but together can add up to a great deal. Better understanding these fees and how they're triggered should give a greater ability to judge how useful they are in relation to the cost and whether or not they should be avoided in the future.

- Overdraft Protection/Fees

An overdraft is like a self-incurred NSF, or insufficient funds charge. If you try to withdraw funds from this account when there are not enough to do so, you'll incur an overdraft fee, even if the bank hasn't actually done anything on your behalf. This most frequently occurs when one cashes a cheque that they believe will be deposited to their account immediately, but in actuality is held up for some days, common with personal or out-of-area cheques.

Some accounts will provide overdraft protection, whereby the bank will actually cover the cost of the amount even though you can't fund it, effectively giving you a small line of credit. Most overdraft protection will be fixed at a relatively small rate, as little as $50. You'll be charged anywhere from $20 to $35 for using this service as well as interest on the negative account balance, making this a costly option.

- Wire Transfers

Wire transfers are a convenient way to quickly send money to an individual or company, foregoing the need for the need for lengthy payments via mail. These services are also costly though, with international transfers up in the $15 range.

Internet banking may offer you the same capability for a fraction of the cost, so this would be the ideal method to pursue for this type of transaction first.

- Monthly Fees/Minimum Account Balance Fees

Most banks will charge a monthly fee which is usually waived if your account has a good degree of money held in it, usually $1,000 minimum. These monthly fees are usually no more than $5.

- Debit Card Fees

Virtually all banks offer their customers debit cards that can be used to directly access fund from their accounts for daily purchases at just about any location. Money can also be withdrawn from any ATM.

Debit card purchases will usually incur fees ranging from .75 cents to $1.50, though some cards may actually charge nothing. Withdrawals from ATM's on the other hand usually have at least a .75 cent minimum fee, plus an additional charge that the company operating the ATM levies on anyone who makes use of it, often an additional $1-$3.

- Miscellaneous Fees

These can be wide-ranging, and each bank usually has a couple of these neat little fees in their arsenal. You may be charged for excessive amounts of withdrawals or general account activity, charged for using the tellers, charged for calling their toll-free lines to get information, if you can dream, they may charge you for it. All of this information will be hidden somewhere in their terms, or should come to light eventually through scrutiny of your bill, so be sure and avoid any unnecessary extra fees.

- Conclusion

Banks provide a valuable service above and beyond just our basic banking accounts, credit cards with low APR rates, and our economy would not be able to function correctly without them. This doesn't mean we need to blindly give them fees at every turn though. Banks do quite well with or without your fees, so make sure you're giving them as little as possible by knowing the most common fees and alternatives to using them.
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