| Hi Taylor
- What's the deal with bank fees? I've been thinking about closing
my Chase account because I don't like all the extra charges, but I
don't know if there's a better option out there. Is every bank trying
to steal my money? - Jenny
Hi Jenny - I won't go as far as to say every bank is trying
to steal your money, but most of them certainly want to take as much
as they're legally allowed to. I'm glad you asked this question, because
I think it's important to understand the reasoning behind these costs.
When you know why the money is being taken, you have better odds of
doing something to get the fees waived.
One charge that a lot of people don't understand is the minimum balance
fee. Why should I be charged extra for not having a lot of money?
It seems counterintuitive, and it certainly isn't ideal for the customer.
Banks need to have sufficient capital to cover all sorts of costs
while still keeping a lot of cash available for consumers. If you
open a checking account with limited funds, you're not helping the
bank cover it's own operating costs, so the bank uses fees as an incentive
for you to deposit more money. You might not like it, but that's the
reality with most of the big banks.
Smaller, online companies are typically better about limiting account
balance fees, because they have fewer overhead costs and fewer people
to answer to. If you're looking to keep a small account and avoid
getting dinged by the bank, you should consider using an online company.
As for the specific fees, like overdraft and ATM withdrawal, those
are hard to escape. Overdraft charges can feel very unfair, especially
when you overspend by $.05 and then get charged $25 or more. Unfortunately,
that's the price you pay for asking the bank to cover a purchase made
with insufficient funds. If you think of it as the processing fee
for a loan, $25 is relatively inexpensive.
ATM fees get charged by both banks and ATM owners, and it's really
just the universe's way of saying, "don't forget to take out some
cash when you go to the bank." When you force Chase or Wells Fargo
to access your money through a third-party vendor at a gas station,
you can expect the company to ask for a couple bucks in return.
In general, it's not easy to avoid bank fees. These companies want
you to behave in a certain way, and they'll try to charge you every
time you shake things up. The key is finding a bank that meets your
needs, then speaking with an accountant to see what you can do to
avoid certain charges. As long as you're reasonable, you should be
able to work something out. Good luck, Jenny!
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an offer or solicitation for the sale or purchase of any specific
securities, investments, or investment strategies. Investments involve
risk and, unless otherwise stated, are not guaranteed. Be sure to
first consult with a qualified financial adviser and/or tax professional
before implementing any strategy discussed herein. To submit a question
to be answered in this column, please send it via email to Question@GoFarWithKovar.com,
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