One of the things I hate paying the most are bank and credit card fees. They are so unnecessary, and they already make money off of customers in SO many other ways. Bank and credit card fees are profit centers for banks, and that’s why they nickel and dime us to death, because those nickels and dimes equal billions of dollars in revenue for them each year.
Our goal at The Budget Author is to help you save money in all areas of your life, and some people literally spend hundreds of dollars on fees throughout the year, but that money could be invested into growth stock mutual funds and turned into thousands of dollars over the long term. Here are some common fees and how you can avoid them.
Overdraft Fees: The BEST way to avoid these is to put together a solid monthly budget and stick to that budget. If you follow the budget and allocate money to certain expenses each month, you’re much less likely to overdraft your checking account. Our workshop series helps you create a budget and STICK TO IT! Another good way to avoid these $25 fees is to link your savings account to your checking account, and the fee is usually $5 to $7 instead of $25 if you overdraft. If you do get an overdraft fee, many banks will waive the fee if it is the first time that you overdrafted.
Annual Fees: Simply avoid any bank account or credit card that offers annual fees. This is 2010, and there are PLENTY of financial bank accounts and credit cards that don’t have annual fees, just do your research.
Balance Transfer Fees: 0% credit card offers are great, especially if you’re trying to get out of credit card debt. Simply transfer over your existing balances to the 0% card and save a bundle in interest while paying off the debt. Except, credit card companies will try to slap a 3 to 5% balance transfer fee on you which acts as pre-paid interest. This takes a little negotiating skill, but if you call the company and sit on the phone with them for a while and let them know that you really want to become their customer but you won’t unless they waive the balance transfer fee, you might get the right person on the phone who will do it.
Inactivity Fees: These fees are ridiculous. If it’s a bank account that you never use, just close it out. The same goes for credit cards. Some of you have heard that it’s better to keep the card open so it doesn’t ding your credit score. Don’t worry about the 10 points you’ll lose on your credit score. Worry about the fees they might rack up on you without your knowledge and the next thing you know, they’ve thrown it to collections without telling you and your credit is dinged even worse. I say this coming from experience, it’s happened to me before!
The bottom line is to just be smart and use common sense with bank accounts and credit cards. There’s no reason to pay all of these extra fees. It adds up, so be aware of your various accounts and stay on top of them. Do this, and you’ll find that you have a lot more money left over at the end of the month for savings and paying off debt.