Banks now get an average of 27% of their revenue from fees. That's a lot of cash out of your pocket! In fact, a typical account fee of just $6 could buy you at least a 6-pack of crush. Mmm... orange goodness.
The good news is that even these 7 most aggravating fees can be Crushed.
What exactly is "Crushing a fee"? You see, Crush in a bottle is quite a sweet refreshing drink. This is exactly how you should first approach reversing any bank fee. But if sweet doesn't work, you'll need to knock some heads around, and thus the glass bottle comes in handy. This is just an analogy of course, but you get the point. Let’s move on to the 7 fees and how to "Crush" them...
7. The Teller Fee
Not as common as it used to be, some banks will still charge you to discuss certain transactions with a teller. It's like a bad 900 number...
Solution: Don't give your business to a bank that charges you to talk to a teller. There are plenty of options include credit unions that won't ever charge you to talk to your banker.
6. The ATM Fee
ATM fees can get you on two ends if you use an ATM that is outside your bank's network. The ATM itself can charge you anywhere from $2 to $5 just to make a withdrawal. On top of that most banks will charge you around $2.50 for making withdrawals from an out of network ATM.
Solution: Get cash from your bank's ATM. Plan ahead when you need cash, or try a bank that gives you a few free out of network ATM withdrawals a month (credit unions are great for this). Also, consider choosing a bank that has a branch or many ATM's near where you live and/or work.
5. The Account Balance Fee
Some accounts have minimum balances that need to be kept. If you fall below those balances, bam! Fee. The fee often outweighs any benefits you might receive from that type of account (minimal interest bearing, for example).
Solution: Get a minimal amount of cash in a free checking account. Stash the rest in a high-yield savings account that you can electronically transfer in and out quickly.
4. The Over Limit Fee
This applies to most bank credit cards or lines of credit. When you charge more on your credit card or line of credit than your available credit, you're gonna get hit with this fee.
Solution: Call your bank and ask them to decline any charges over your account limit. Or even better, watch your balances and make sure you always stay below your limit.
3. The "Paper Anything" Fee
Want paper statements? Fee. Want paper copies of checks? Fee. Pretty much anything not delivered electronically these days will get you dinged with a fee.
Solution: Embrace technology, dude. If you really need a paper statement, you can always request one from your bank (for a fee of course). Otherwise, stick to e-delivery, avoid the fees and make Captain Planet proud.
2. The Dormant Account Fee
Not using that account much? That's gonna cost you as well. When no activity is recorded for a certain amount of time (12 months is standard), many banks will charge you a fee for not doing anything. Yes, it's crazy.
Solution: Close the account if you're truly not using it much. Plus, the fewer accounts you have to keep track of, the simpler tracking your finances can be.
1. The Overdraft Fee
Easily the most common, and frustrating fee for consumers, the overdraft fee can be defeated. With many banks in the UK approaching $57 overdraft fees, learning how to avoid and combat overdraft fees is a must for any frugal American.
Solutions:
- Most banks will waive your first overdraft fee with them, but you have to give them a call or go into your branch to request this.
- If you get hit with multiple overdraft fees in excess of $100, you likely won't get them all removed, but a call can usually get them cut in half. Ask the customer service rep to get approval from a manager right off the bat for this type of request.
- Setup a small no-fee savings account to act as an overdraft protection account. If you do overdraft, you'll still get hit with a fee, but it will be in the $10 range vs. a typical $30-something overdraft fee.
- Avoid using your debit card, pay with cash or credit.
Do you have any fees that frustrate you? How did you Crush them?
Taking advantage of a good deal is a smart thing to do, but holding onto that deal as long as possible is even smarter. As time passes, even mediocre deals can look better and better.
The types of deals that generally fall into the category discussed here are ones that have contract terms, such as cellular phone plans, satellite TV agreements, and things of that nature. The reasons these deals can be so valuable is that over time, services tend to raise the minimum amounts available and raise prices as well. By locking into a deal today, you could be saving much more money years from now.
Let’s look at a cell phone example. A basic plan a few years back might have offered unlimited in-network calling, free nights and weekends, and 300 anytime minutes for $30. Today, the most basic plan might offer you more text and picture messaging, 500 anytime minutes, etc., but might cost more like $50 per month. If you do not use all of the extra minutes and features of the new plan, you would probably be better off staying with your old plan.
What many people fail to realize is that you can often continue terms of service after your contract runs out. If you signed a 2-year agreement, you are locked into that plan for a full 2 years. At the end of that time, you don’t always need to sign up with a new contract at a higher rate or with more features. You can usually stay in your current plan at your current price indefinitely, as long as you don’t make changes or take advantage of a promotion, such as getting a new phone for free.
You can imagine how much you could be saving if you were still paying $30 for cell phone service 10 years from now. By that time, basic plans will surely cost more than $100 a month. If your plan still met your needs at that time, it would be foolish to switch. Staying in a low cost plan is like an investment for the future.
Such arrangements are possible in other services as well. A friend of mine signed up when the Dish Network launched. The company had a deal where you could choose any 10 channels (of the hundreds they offered) for $20 a month. If you think about your viewing habits, you may also only watch a handful of channels on a regular basis. It was a good deal at the time because many of the channels my friend chose would only have been available with a premium cable subscription, which would have cost about $100 a month. Dish Network quickly closed the deal to new subscribers, but my friend continued to enjoy it for many years.
As I said above, not all service contracts allow you to continue your current terms indefinitely. But many more than you might expect do allow it. So before you upgrade to a new service, when your current contract ends, consider if your current service can be continued if it is meeting your needs, or if the new and improved service will really be worth the extra cost.
Knowing where you are financially is always important, and more so during big changes in your life. Graduation is one of those times. When you graduate, many things change, including the role money plays in your life. While going to college, your focus was on your education; being out of college, one of your primary goals should be to put together a financial plan and start paying off your student loans.
Your first step in putting together a financial plan is to find out where you stand now. You will want to find out your net worth, which is probably negative. Include all of your bills, loans and the amounts you have to pay monthly for each. Also list any income you have, from a job or other sources.
Once you have a picture of where you are now, the next step is to determine where you want to be. Don’t plan out a full year-by-year plan towards your retirement, but make some realistic guess as to where you want to be in one or two years. This will give you something to work towards. Make your goal simple, such as saving enough money for a down payment on a house or paying off a certain amount of debt.
With your current financial analysis and your goals, you can put together a monthly plan for how much money you will need to allocate towards different expenditures. If your goal is to save money for a down payment, you might consider putting more money into a savings account instead of accelerating your loan repayments. Having a simple plan will make sure that you are not impulsively spending money, but instead are actively working on your financial future.
If you are new at your job, many employers have outside advisers that can sit down with you and help you even more with your plan. Ask your HR department if your company offers such a service. If not, you can find a local financial planner and buy several hours of his or her time to go over your plan with you and make sure that you’re on the right track.
Putting together your financial plan is one of the most important pieces of paper you can produce, and it will go beyond just giving you a grade, and possibly secure your financial future.
Best Buy recently announced that it is testing an expanded electronics recycling program. In addition to the cell phone and ink cartridge collection that its stores have had for years, select stores will now accept old TVs, computers, and other electronics free of charge. While there are certainly positive environmental benefits to such programs, special steps should be taken to help protect your identity.
Before recycling any electronics that contain personal information, be sure to remove, erase, or destroy your data. Claims by companies like Best Buy that they will erase your data for you should not be trusted. There have been many reports of people being contacted by those who purchased their "recycled" cell phones on eBay, only to find contact lists, emails, and more still on the old phones. Your personal computer probably has much more sensitive data than your phone.
Removing data is more complicated than just hitting the Delete key. Deleting data usually just makes it difficult to find rather than actually removing it. You can imagine how taking the index card for a book from the card catalog (or entry in an electronic card catalog) would have a similar effect. Until the book is taken from the shelf and replaced by another, it’s merely lost and not actually gone. Programs exist to “wipe” your data and they can be quite effective. They essentially delete the data, and then repeatedly write junk data over the previous location.
Another option, which I prefer, is to remove storage media (hard drives, sim cards, etc.) before recycling electronics. Doing so allows me to drastically reduce my waste without putting my information at risk. Software methods may be able to accurately remove data, but putting a screwdriver through it, or archiving it in a secure location, works as well.
Identity theft is a major problem and can ruin your credit history. Protecting information from theft does much more good than insurance and notification measures after the theft can hope to accomplish. Safeguarding your personal information, including electronics that you plan to recycle, significantly reduces your risk of identity theft.
In a recent post on his Red Tape Chronicles blog, Bob Sullivan reminded readers to beware of stimulus check offers.
Everyone from department to grocery stores seems to want a piece of your economic stimulus check. As an incentive to get you to spend at their store, many are offering discounted gift cards. A common practice is to offer a $330 gift card for the standard rebate check amount of $300. Some stores don’t care if you actually have a rebate check, and place no limit on the amount of cards you can buy at the discount.
The main point that Bob makes, as I have mentioned in the past, is that gift cards tend to be a bad deal. Companies count on a portion of the balance going unused. My previous post cited statistics that 10% of gift cards were expected to go unused. It’s no wonder that companies are offering a 10% bonus as part of the stimulus check promotion. If prior trends hold, that 10% bonus is the same 10% that will go unused. So the companies have little to lose but much to gain in the way of new customers and increased spending.
What’s more, fees can quickly eat up more than the bonus amount, leaving you with less money than if you had just cashed your check. Other risks include bankruptcy of the company or spending more money than you intended either by supplementing your gift card with cash or wasting your “free” money.
The article advises using such an offer only if you have an impending purchase that was already planned. In doing so, you basically get 10% off the price you were planning to pay. In a similar manner, I would also concede that taking the offer from the grocery store is probably a safe bet. Food is a constant expense and one that will easily allow your gift card balance to be depleted quickly. Loading up a grocery gift card at a discounted rate can mean real savings in your food budget.
There are certainly instances where taking a company up on a stimulus check offer will provide a financial benefit. Unfortunately that is not always the case. Like any other financial decision, think about the value of the offer and whether you will actually see the marketed benefit.
3 Comments