En español | Rising banking fees may have you wondering whether it's time to switch to a different bank or perhaps join a credit union. Some bank fees may be inevitable, but others are completely unnecessary in today's competitive marketplace.
If you're on a fixed monthly income or are trying to stick to a budget, make sure you're not needlessly paying for these 10 credit and banking extras:
1. Overdraft protection
According to a July report from the Center for Responsible Lending, the median overdraft fee was $35 and overdraft fees cost consumers $16.7 billion in 2011, the latest year for which data were available. Paying for overdraft protection can really add up, because overdraft fees typically beget more overdraft fees. Such fees can be triggered in four ways: using an ATM, writing a check, making a purchase with a debit card or making other electronic transactions, such as online bill payments.
To avoid high overdraft fees, instruct your bank to decline any transaction where you don't have sufficient funds in your account. Alternatively, seek out banks with consumer-friendly policies. For instance, JPMorgan Chase doesn't charge overdraft fees on ATM withdrawals. HSBC and Citibank don't impose overdraft fees for debit card use or ATM transactions.
2. Fancy checks
Designer checks and custom checks are visually appealing but can mean money down the drain. Consider how often you find yourself actually writing a check these days. Many people find it much more convenient to pay with a debit card or cash, or to pay bills electronically, where no check is needed. Even if you use checks regularly, opt for the basic checks your bank offers; many institutions provide those free of charge.
3. Credit card warranty insurance
Banks that have their own credit cards may recommend credit card warranty insurance when you sign up for a new card or if you have been a longtime cardholder. Just remember that this is an up-sell and only offers warranty insurance coverage when you make certain types of purchases with your credit card. Review the terms and conditions of this add-on carefully to determine whether you really need it. In many cases, the basic warranty coverage you have for a big-ticket item is just fine, and additional insurance simply isn't worth it.
4. Job pay protection insurance
Those offers you get from credit card companies promising to waive fees on missed payments, or to pay your bill on your behalf in the event you lose your job or face some type of financial emergency, can be attractive to those who are struggling to make ends meet. However, you could end up paying a high price for this type of protection without ever actually needing it.
Consider the total cost of this service over the year and what your current minimum payment and balances are. While it's not wise to pay only the minimum payment each month, you can keep your credit in good standing and avoid paying fees for job pay protection insurance by making minimum payments only for a few months to get you through a tough time.
5. Credit reports
Checking your credit reports regularly is a good idea. You can spot any mistakes that may be in your credit files and keep tabs on your credit health. What's not a good idea, though, is to pay for credit reports that are easily and legally available to you at no charge. Under federal law, every adult in America is entitled to one free copy of his or her credit report once every 12 months from each of the three main credit bureaus: Equifax, Experian and TransUnion. To get your free credit report, go to annualcreditreport.com. That's the government-mandated website that the credit bureaus must maintain for U.S. consumers.
6. Invoicing services for small-business owners and entrepreneurs
Some banks are now offering small-business assistance services and options to help business owners manage invoices and payments. These services might include options to customize invoice templates and other documents with your logo, set up automatic reminder emails and keep track of invoices on a dashboard. However, there are dozens of free invoicing programs and apps available for small-business owners if you happen to be an entrepreneur. While a paid service through a bank may be convenient, you may end up paying for something that you can actually get for free. Do some research to find software programs or apps that can help you manage invoices without enrolling in any type of paid online program.
7. Online bill payment services
Having the ability to pay your bills online can help to organize your budget and keep your finances organized. However, online bill payment services shouldn't come with a fee. Some banks and institutions do impose fees for certain types of accounts, so make sure you're aware of the cost of those transactions before you authorize payment. Talk to a bank representative to find out if any accounts have free online bill pay options.
8. Copies of checks or image copies
Many banks post image copies of checks in your transaction history so you can see exactly which checks have posted and review your deposit slips after making the deposit. Just make sure you're not paying an extra fee for this service. At the very least, the bank should be able to give you an electronic copy of the front and back of a canceled check for your records. This service might only be offered to longtime or privileged customers, so find out if you are eligible.
9. Mobile banking options
Now that more people are using their smartphones or tablet computers to take care of bill payments and manage their finances, many banks have created mobile websites and apps for streamlined mobile banking. These apps and services should be free, so read the fine print before enrolling in any type of mobile banking service. Again, speaking with a bank representative before you enroll can help ensure you won't incur unexpected fees or charges just for managing your account on the go.
10. Year-end banking or spending summaries
Year-end banking and spending summaries can be useful for putting together next year's budget and analyzing your spending habits for the year. You might also need these documents when you are preparing your taxes, as year-end statements typically itemize your expenses in various categories. Most banks offer free, printable year-end summaries or PDF documents that list all your withdrawals, deposits and related transactions. This is a standard service that is usually free of charge at most banks and financial institutions.
As you can see, many credit and banking services can streamline your finances, keep you better organized and even help you save time and money. Just make sure you're not paying needlessly for things you don't need or for banking services that should be offered at no cost at all.
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