No one likes to spend money they don’t have. Debt has a tendency to multiply before our eyes. But in some cases, that debt is avoidable.The prime examples are ATM and overdraft fees for banks. For some account holders, it’s such a small amount, it’s not worth worrying about. But that small amount adds up, big time.
That’s how JP Morgan Chase, Bank of America, and Wells Fargo collectively earned $6 billion in these types of fees in 2015.
How could they get so much?
The price of fees is steadily rising. The average out-of-network ATM fee is now up to $4.35. That’s a 23% increase compared to fees in 2010. It’s the price of a cheap lunch, or a latte at Starbucks. For people who incur ATM charges two or three times a week, they are losing between $500-$700 a year, and getting nothing out of it.
But that’s not even half of it; more revenue was lost through overdraft fees. The average amount charged in a single fee is $34. That’s a lot of money for banks to take from accounts that have nothing. Of course, some banks charge the fee for every transaction made while the account is in the negative. Other banks only add the charge once per day, or don’t charge at all if the account was overdrafted by $5 or less.
Because of these, some people are charged more than others. An unlucky 8% of accounts are paying the majority of overdraft fees. When considering all banks in America and not just the first three, it’s a total of $32.5 billion in overdraft fees in 2015 alone. JP Morgan was $1.9 billion of that, and Bank of America and Wells Fargo were both $1.6 billion.
Don’t let the hands of banker billionaires get anywhere near your wallet. That doesn’t mean you have to stop using banks; just that you should be smart and attentive about it.
You should always be aware of how much is in your account. Many banks have free smartphone apps that allow you to check your balance at any time. If you don’t have access to the app, then you’ll need to keep your checkbook balanced, or write everything down. This can save you from overdrafting accidentally.
Alternately, there are some banks that don’t charge overdraft fees at all, such as:
- First Republic Bank
- Charles Schwab
In addition, there are banks that offer accounts that don’t charge overdraft fees. They are Key Bank, Union Bank, and – rather shockingly – Bank of America.
Digital branches like Ally and Charles Schwab are good for saving on ATM fees as well, because these two banks don’t have ATMs of their own. In addition, they will actually reimburse you for any ATM fees you incur, and give you interest on checking accounts. What you lose in convenience, you make up for in savings.
If you want to save on ATM fees, but don’t want to switch banks, there’s another simple solution: grocery stores. Most stores allow you to ask for cash back, if you pay with your debit card. Though you have to make a purchase to do it, you’re basically getting a free withdraw. Simply take out enough to last you the week, or until you go shopping again (which is also a good method of budgeting your money).
Despite these simple saving methods, banks continue to make billions in fees. This is mostly because the account holders being charged don’t know how to stop it. But now, you do; don’t let the banks go cherry-picking in your pockets.