Banking and fees generally seem to go together hand in glove. Fees are often thought of as an unavoidable expense to take advantage of the convenience of banking institutions.
According to a nerdwallet.com analysis of data from the Consumer Financial Protection Bureau (CFPB), "The average cost of monthly maintenance fees, ATM and account use fees, and overdraft and nonsufficient funds fees for a checking account is nearly $1,000 over a decade."
Consumers who want to keep their banking fees to a minimum should be aware of where fees come from, understand how to avoid them when possible and know how to compare fees among banking institutions so they can choose a bank that fits their lifestyle most closely.
Find out if your checking account has a maintenance fee
One of the most common and most overlooked fees is the maintenance fee banks automatically assess on checking accounts each month. Luckily, this fee is the easiest to avoid. Some institutions require a minimum balance to waive the fee. Others require two direct deposits a month.
Your best bet for avoiding maintenance fees is to choose a bank that offers a completely free checking account to anyone who applies. Salin Bank of Indianapolis offers a free checking account for everyone, with no minimum balance and no monthly service charge. It also will buy back your old checks and debit cards and offers a rewards program that allows customers to earn and redeem points for gifts.
Before you sign up for a new checking account, find out what fees and minimum balances are included and shop around to find out which banks in your area offer the lowest service charges.
Determine the best way to build your credit score
Unfortunately, people plagued by bad credit scores may have difficulty finding banking institutions that will allow them to open new accounts. Bankrate.com explains, "Banks and credit unions want to learn about your financial past before establishing an account with you. They do this by running a bank history report on you."
If the bank history report turns up a past account that was "closed for cause," it may think twice about welcoming you as a new customer. Accounts may be "closed for cause" if you were unable to pay the fees for overdrafting your account, if you committed fraud or if you repeatedly wrote bad checks.
The bank will also likely check its applicants' credit reports to determine whether they've recently filed for bankruptcy or if there have been reports of fraud or identity theft. If any one of these instances pops up when you try to open a new account, it could prevent you from doing so.
Some banks, however, offer programs to help people get back on their financial feet. Salin Bank, for instance, offers a "Bank On" program designed to get a person a checking account who has been turned down for accounts in the past (you must go into a branch to apply).
Avoid overdraft fees
One of the biggest fees a bank customer will pay is for overdrafts. The CFPB found in a 2014 study that "the majority of debit card overdraft fees are incurred on transactions of $24 or less" and that the median overdraft fee is $34. Big purchases don't tend to trip up consumers; it's the nickel-and-diming of normal daily purchases that can put them in hot water.
The key to avoiding overdraft fees is to keep your account in good standing and to know exactly how much you have in there. Many banks have online or mobile banking platforms that allow you to access and view the balance of your accounts anytime, anywhere. Taking advantage of this service will help you avoid paying those extra out-of-pocket costs that can drive the cost of banking sky high.
To learn more about avoiding bank fees and choosing a banking institution that's right for you, visit a Salin Bank location near you or check it out online. Member FDIC