Debt management includes watching out for hidden bank fees
Way back in the 1970's, using a bank was downright difficult.
Banks kept strange hours; many were typically open only from 9
AM to 2 PM on weekdays, making it impossible for the average
customer to actually set foot in the place. Of course, virtually
any financial transaction required interaction with a teller,
and that, combined with the odd hours, made it really hard to do
business with a bank. On the other hand, fees were minimal, and
transactions were straightforward. How times have changed.
Today, it's much easier to do business with a financial
institution. Most are open six days a week and often are open
throughout the work day. Automatic teller machines are
everywhere, and you can often do business with your bank without
even going near it. Unfortunately, doing so is more expensive
than ever, and consumers should be aware of the numerous hidden
fees that banks charge for their services. Those who tend to
have debt and money management problems should be careful, as
the fees can be astronomical for those who are careless or
financially irresponsible.
It's great to use an automatic teller machine (ATM) instead of
the bank. They're everywhere, they're always open, and they're
easy to use. Watch out for the fees, however. If you use an ATM
that is owned by a bank other than your own, you could end up
being charged a fee by both banks. A $40 withdrawal from another
bank's ATM could cost you a $2 fee from your institution and a
$2 fee from the one that owns the ATM.
That's a 10% fee for the convenience of using another bank's
system. Another fee associated with the ATM is the fee that some
banks charge to transact with a teller. That's right. Banks are
so confident in their ATM system that they now expect you to use
them instead of using a real human being. If you hand your
deposit to a teller instead of using the ATM, you could be
charged $3-4 for the privilege.
Consumers who use a debit card, and that's just about everyone,
should watch out for overdraft fees. A debit card looks like a
credit card, but functions like a check, taking money out of
your account immediately. Many firms now include automatic
overdraft protection on their accounts, and they will allow you
to use your debit card or checking account to spend more than
you have in your account. That's a nice thing to do, but they
typically charge $25 or so for this "convenience."
If you merely spent $10 more than you had in your account, the
$25 fee amounts to a 250% interest rate on the short-term loan
of $10. You may not even know if this is happening; your bank
will not notify you when you make your purchase that you are
overdrawing your account. This is quite a profitable venture for
the banking industry, which took in some $10 billion in
overdraft fees in 2004.
Some banks are heavily promoting online bill payments, citing
convenience. That's true, but you may be charged for the
service. One major firm charges $6.95 per month for online bill
payment, and that fee applies even if you pay just one bill! It
takes eighteen 37¢ stamps to make up for that fee; if you are
paying fewer bills you should mail them instead.
Many of these fees are not prominently disclosed, so be sure
that you read your bank statement carefully. Otherwise, you
could easily end up paying $50-75 per month in service fees.
About the author:
Talbert Williams offers debt consolidation referrals and
advice. For more information, articles, news, tools and valuable
resources on debt solutions, visit this site:
http://www.1debtfreedom.com
