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Banking On Stupidity

How to avoid those pesky bank fees

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The big banks have one goal: to separate you from your money. The banks have become so good at robbing you blind they’ve turned fees into an art form. Consider this: the top three banks in America – JP Morgan Chase, Bank Of America and Wells Fargo – made over $6 billion dollars just from overdraft and ATM fees alone in fees last year, according to a SNL Financial and CNNMoney study.

Most of these fees can be avoided. But you have to work hard to steer clear of them.

Here are the top ways the big banks suck up your money and ways to thwart them from doing it to you:

1)Overdraft fees. The average overdraft fee is now $35, regardless of how much past your available amount the bank has covered. The majority of overdrafts are under $24.

According to the Consumer Financial Protection Bureau, that translates to a massive 17,000 percent interest rate on your three-day “loan” from the bank.

How to avoid this – opt out! By law, your bank must allow you to opt out of overdraft protection. Do it, do it now. Would you rather get denied a Subway sandwich because your debit card won’t go through or pay $40 for your $5 footlong?

2)ATM fees. The average ATM fee is now $4.35. That’s a lot of money to hand over so the bank can hand you over your money.

How to avoid this – don’t go to a bank that isn’t yours. Get cash at a grocery store or drug store that offers cash back. Use your debit card instead of cash whenever possible. Online banks like Ally Bank will give you back $10 worth of fees every month and have a whole network of free ATMs.

3)Account fees. The big banks take a lot of your money just for the privilege of having an account. Bank of America charges $12 a month; Wells Fargo $10 a month. These fees can completely avoided.

How to avoid this – first, you can maintain a minimum balance. Most of the banks make you maintain a $1,500 balance. Keep in mind that is every day of the month. If you slip below the threshold for even one day, you’ll get slapped with the fee. You can also avoid the fee by staying a student. Chase charges no monthly service fee for college students, ages 17-24, with proof of student status. Bank of America will waive your monthly maintenance fee if you’re under 23 and enrolled in a high school, college or vocational program. US Bank charges no monthly maintenance fee for students enrolled at a high school, university, technical college or trade school. You can also direct deposit to avoid the fee. So if you have a steady paycheck, have it sent to your bank and avoid the fee. If none of those work for you, try an online bank. Ally Bank and Charles Schwab bank do not charge any fees whatsoever.

4)Mail fees. A lot of the banks now charge you to get statements in the mail. TD Bank charges customers $1 extra to receive paper statements. U.S. Bank charges up to $2 on some checking accounts.

How to avoid this – That’s an easy one. Go paperless. Create a mailbox just for your bank statements.

5) Transfer fees. Some banks now charge you if you transfer money from your savings account to your checking account too often. Many limit you to six transfers.

How to avoid this – plan ahead. When you do a transfer, don’t just transfer the exact amount you will need to cover the check you just wrote. Transfer more than you think you’ll need. With the interest rate you currently receive, maybe one percent if you are lucky, you will need to keep that $100 in savings for a year to get back a measly $1 in interest. Better to pad your checking then pay through the nose.

You don’t have to be ripped off by your bank. None of the suggestions above are difficult or time consuming. The average household pays almost $300 in bank fees that can be avoided. You work hard for your money, with a little diligence you can keep more of it.

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