In times of economic instability where job security is a becoming a thing of the past, one must start thinking and living frugally. One way to do this is by cutting the unnecessary fat from our spending. The most inconspicuous fat in our monetary lives are fees. There are many hidden fees in our lives and if we find out what they are, and how to reduce them, they can turn into little ways to save money each year. Let’s examine cutting fees to save money.
Bank fees have the greatest potential to drain our funds. Today bank fees can range from $2 to $40 for various reasons such as:
2. Insufficient funds
3. Account maintenance
4. Non-bank ATM usage
5. Check/debit card ordering
6. Stop payments on checks
One of the most well hidden banking fees you may not know about is related to a limit on transactions to and from your savings account. Regulation D sections 204.2(d)(2) and 204.2(d)(4) lay out the limits and your bank’s recourse of action to enforce those limits. Section 204.2(d)(2) allows for only six transfers, withdrawals, or a combination of both, every four weeks or statement cycle. In addition, no more than three of these allowed six, can be made by check, draft, debit card, or similar deposits made by you and paid to a third party. In section 204.2(d)(4), banks can either prevent additional transfers from your savings account or they have the option of exacting fees. Since banks are in the business of making money, you are more than likely to be hit with a fee.
Fees for Using Plastic
Credit and debit cards come with numerous fees that are often in plain view in your cardholder agreement, thanks to the Schumer box. However, additional fees can creep up for credit cards in your billing statement inserts. Of course, there are the standard fees such as over limit and late fees; however, many fees are present that are not readily recognizable as fees.
Fees under the guise of percentages are the most common of the hidden credit card fees. Cash advances usually charge between two and four percent of the amount obtained, plus the APR is often higher than that for purchases, and there is no grace period for cash advances. This means as soon as you take out a cash advance you begin to accrue finance charges. Plus, the low APR you have for purchases could be snatched from you if one late payment or over limit occurs on your account.
Pre-paid debit cards have fees for any type of transaction you may make. There are fees for loading funds, transaction fees, non usage fees, ATM fees, and if you want to get away from paying transaction and ATM fees you can opt for a monthly fee for some issuers. Debit cards linked to your bank account do not come with the fees that their pre-paid counterparts do, however, they are subject to the same fees outlined in your checking, savings, and/or money market account documents. Unfortunately, debits cards can overdraw your account due to the following:
1. Delays in processing debit transactions.
2. Inconsistent record keeping on your part.
3. Your bank allowing transactions to process even though you have insufficient funds in your account.
Number three can cost you hundreds in one statement cycle if not realized initially due to overdraft, insufficient funds, and sustained overdraft fees which can easily pile up before your bank sends you a notice of the overdraft. In addition, ATM fees can add up over the course of a year, especially if you use an ATM machine not owned by your bank. Banks can charge anywhere from $1 to $3 for using their ATM and your bank may add an additional $1 to $4 on top of that.
Fees Associated With Bill Payments
It is common knowledge now that late payment of bills may result in late fees, but did you know that some companies charge a processing fee for convenience payments? Paying a bill over the phone with a check or credit card can result in an additional fee called a processing fee. So instead of paying $100 for your gas bill, you could pay $103 or more. These fees even pop up when paying bills online with certain companies.
Finding Little Ways to Save Money by Reducing These Fees
Once you know what fees you are dealing with, it is simple to cut them down to size or even eliminate them altogether. Here is a list of ways to manage these fees so you can save money:
1. Maintaining an up-to-date record of your checking account is a huge way to save money
a. Log every transaction that moves to and from your checking account the moment you initiate them or anticipate them to occur (for recurring transactions)
b. Remember to include ATM fees your bank charges each time you make a debit withdrawal
2. Limit the amount of transfers to and from your savings account to within the limits set forth by Regulation D.
a. Make no more than 3 transfers to your savings from your checking account
b. Try not to use your savings account to pay third parties, such as bills, if at all possible
3. Only take cash advances from your credit card in the case of an emergency. That $20 for the movies is not worth the fees assessed in the long run.
4. Paying your credit card bill on time to eliminate late fees and to maintain your low APR can save you money through the life of your credit card.
5. Use your pre-paid debit cards wisely as a little way to save money.
a. Eliminate frequent load fees by loading larger amounts sparingly. Loading $200 twice a month with a $5 load fee instead of loading $100 four times a month can save you $120 a year in load fees.
b. Opt for POS cash back instead of using ATMs( also useful for checkcards/debit cards). You may only receive the fee assessed for purchases. However, banks are becoming hip to this trick so be watchful for updates in your terms and conditions.
6. Enroll in on-line banking
a. On-line banking offers easy tracking of funds movements to stay on top of discrepancies between your records and the bank’s
b. Make use of automatic bill payment if available to avoid late payment fees and biller payment processing fees
These are just some of the fees, both common and hidden, that eat away out our funds frequently. Pay attention to the seemingly junk notices coming from your bank and billers as there may be term changes that can impose new fees. Above all, be prudent in your spending, and keep accurate and up to date records of all transactions. With continual practice of these little ways to save money, you can save hundreds of dollars each year and have peace of mind while spending.