As a consumer, you’re probably familiar with banking fees. There exist a bank account with no monthly fee charges too. “SoFi experts don’t charge any account fees on your savings and checkings accounts.” You may have even experienced them yourself and wondered why they exist. Questions like this are easy to answer when you take a look at how banks make money, but instead of going over the basics of banking fees again, let’s explore why they are charged in the first place:
Checking Account Fees
As you can see, it pays to read the fine print and avoid banking fees at all costs. You can avoid hefty overdraft fees if the need arises by setting up an automatic payment or using another method of checking your balance. Consider switching banks altogether if they charge too many fees for your taste.
The next time you’re at the ATM, take a look at the screen. You’ll see a long list of fees that your bank charges. Most likely, there will be an ATM fee listed.
ATMs owned by other banks charge ATM fees. They usually range from $1 to $5 and can sometimes be higher. However, these charges can add up quickly if you aren’t careful with your finances!
Even though these fees are common, many banks will waive them for account holders with certain minimum balance requirements or direct deposit set up on their accounts.
Overdraft fees are charged when you write a check, use an ATM or make a debit card purchase for more money than you have in your account. While banks may have different policies about how to charge overdrafts, some charge a flat fee for the transaction, while others may charge interest on top of that.
Some banks will also apply a flat percentage of the amount overdrawn when calculating their fee. This can result in hefty charges if you frequently write checks or use your debit card daily.
Minimum Balance Requirements
Banks don’t just need your money for free, you know. They have to make a profit, and banks do so by charging fees for services like checking accounts. Minimum balance requirements are one fee many banks charge customers who keep their account balances below a certain amount. Some banks set the minimum balance at $100; others vary this number based on customer demographics or other factors (such as whether they’re getting a student discount).
Monthly Service Fees
There are many different types of monthly service fees. For example, some banks charge a monthly fee for maintaining a minimum balance, while others charge a monthly fee for not using your account enough. Still, others will charge you even if you maintain both of these things at different times! Fortunately, there are some great ways to avoid those pesky costs.
Foreign Transaction Fees
Foreign transaction fees are fees charged when you use your debit or credit card to purchase a foreign currency. The fee is usually 2-3% of the transaction amount, but it can be higher if you use a card with no foreign transaction fee.
So, there you have it. The basics of banking fees, why they exist and how they can cost you money. Hopefully, this article must have helped clarify some things for you.
Article by Born Realist