With technology leading the charge, prices have come down on everything from cellphones to cars. But personal banking — one of the last bastions of our tech-savvy society resisting change — has been digging in its heels.
Bank fees on everything from ATMs to overdrafts have been soaring in recent years. Conventional banks want to charge more, particularly those with brick-and-mortar branches, because they are making less money on loans and need to make up the difference on basic banking services.
Fortunately, the tech-driven revolution has finally reached the world of basic banking services. You can now save on an array of services and avoid onerous fees.
You can pay far too much for banking services and be blindsided. Let's take a look at ATM fees. If you go outside of a bank's ATM network, most of the time you will pay a fee just to withdraw cash from your account. That surcharge averaged more than $4.50 in 2015, up 4 percent over the previous year, according to 24/7 Wall St., a financial news and opinion company. That was the ninth consecutive year these fees have increased.
See also: Don't be ambushed at the ATM
Over the past half-decade, reports Bankrate.com, out-of-network ATM fees have climbed 21 percent, so millions of Americans are paying a steep premium for accessing their cash in a time in which consumer inflation is only running at 1 percent annually.
What if you exceed your checking account balance and bounce a check? Banks will ding you an average $33 per overdraft, according to Bankrate.com. Overdraft fees, totaling more than $30 billion annually, are hugely profitable for banks, although they can be avoided by banking customers. There are numerous ways to save.
The quickest route to savings are tracking down no-cost checking accounts. According to Greg McBride, chief financial analyst for Bankrate.com, 37 percent of banks and 76 percent of credit unions surveyed offer free checking.
"Cast a wide net," McBride advises, "because small community banks and credit unions may offer lower fees." Here are some other, key money-saving suggestions.
Use a credit union
These financial institutions are primarily local and offer consistently lower fees than conventional banks and other financial service providers. Unlike banks, who serve "customers," credit unions have "members" who may be part of an employer group or military branch. Many, though, are open to the general public.
Like banks, credit unions have deposit insurance. They usually don't have huge marketing budgets, which means they can keep their costs down. The cost difference between credit union fees and banks can be significant: nearly three percentage points lower on used-car loans, two points on new-car loans and about one point on credit card rates, according to a survey by SNL Financial. On everyday accounts, such as checking, credit unions also offer lower minimum balances and lower charges for overdrafts. To find a credit union near you, see MyCreditUnion.gov.
Take advantage of special offers
Some banks will bend over backward to get — and keep — your business. Find banks and credit unions offering "fee rebates" that will reimburse you for using out-of-network ATMs. Others may offer you a small cash incentive, from $50 to $300, to sign up for a new account or to get friends to bank with them. You can even find banks that don't charge overdraft or checking "maintenance" fees. Just be careful that the teaser offers don't distract you from paying fees down the road. Always read their fine print. To check out current banking offers at NerdWallet.com.
Stay within your banking network
The highest surcharges on banking withdrawals nail you most when you use out-of-network ATMs. Those quick-cash ATMs in gas stations and convenience stores can hit the hardest. The 10 largest banks are no bargain, either, charging more than $2 for each out-of-network ATM transaction. Look for your bank or bank card's logo on the ATM. Also check online to see if there's an in-network or "affiliated" network machine nearby where you're traveling. The largest networks typically have the most machines.
Also ask your main banking institution if it will impose surcharges for nonaffiliated ATMs. Some will waive the additional fee. And don't forget that every time you make a purchase with a debit card, you can request cash at no additional fee, although there may be a limit on how much cash you receive.
If there are no teller windows involved, chances are you can save some money. Overdraft fees, for example, average $4 less at online-only banks than at conventional institutions, according to a survey by DepositAccounts.com. Not only do online banks offer lower fees on nearly every service, many have 24-hour customer service and no or low minimum balance requirements. And you can do nearly any transaction through your home computer or mobile device.
See also: Online banking 101
Keep in mind that you don't need to have all of your accounts with one institution. You can link your conventional checking account with an online savings account and transfer funds electronically, McBride suggests. For a consumer rating of online banks, check out MyBankTracker.com.
Closely monitor your accounts
Most financial institutions give you the ability to monitor all your activity online through your home computer, tablet or phone — so you don't have to wait for statements. They also may send you automatic alerts through text messaging or emails to tell you when your checking account balances hit a certain amount. This will give you a heads-up to add more money to avoid overdraft charges. Be sure to avoid banks that charge you an additional "extended" overdraft fee that kicks in if you don't pay the first overdraft fee within a certain period of time.