You can't live with them, and you can't live without them.
That's how many consumers see their banks. Their disdain largely stems from the fees and penalties they are charged. In many cases, these negatives mitigate the positives, such as cash awards for opening accounts.
If you fall into the group of people who are not happy with the fees banks charge, there are some things you should consider. While the fees may be nominal in some cases, they tend to be extremely frustrating.
Because they make up a significant portion of banks' revenues, don't expect them to just disappear. Instead, take the time to understand the typical fees you are likely to pay.
The costs of storing your money
If you have a checking or savings account, you likely are charged a monthly maintenance fee. Traditionally, these fees have been standard, and there was no way to avoid them or have them reduced. They were merely one of the costs of having a bank store your money.
However, that has slowly but steadily changed over the past few decades. One of the reasons relates to competition. The banking landscape changed as mergers and acquisitions shrank the number of banks over the years. Those that remained were determined to maintain and increase their market shares.
They set out to address one of the most hated parts of their businesses – excessive fees, including the maintenance fee.
Now account holders can sign up for basic checking and savings accounts that don't have monthly maintenance fees. If they do have maintenance fees, many banks waive them if the account holder maintains a minimum balance, has direct deposit, or both.
Typical balance amount requirements to avoid the maintenance fee can start at $1,000. Minimum direct deposit amounts can start at $500.
Other ways to avoid the maintenance fee include signing up for paperless statements. Banks may also waive the fee if you use several of their services. For example, if you have a mortgage from the same bank where you keep your checking account, the bank may waive the maintenance fee.
Going into the red
The fee that can do the most financial damage to bank customers is the one assessed for bouncing a check. These fees, often called non-sufficient fund fees (NSFs), can cost as much or more than maintenance charges over the course of a year. It adds that allowing your account balance to run low puts you in danger of having to pay these fees, which can run as high as $35.
Banks impose the fee for each transaction they cover if your account has insufficient funds.
There's clearly a way to avoid this, and it dates back to the saying, "don't write checks that your…"
Well, you know the rest. Simply, when you write a check, you should make sure the funds are there to cover it.
Nowadays, with debit cards the same rules may apply. With some banks, purchases made with debit cards will go through or be approved even if you don't have enough money in the account.
That may save you the embarrassment of being told in public that your card was declined, however, it won't keep you from that overdraft fee.
If you have a clean record with your bank and for some reason you wind up being assessed an overdraft fee for insufficient funds, contact your bank. They may waive the fee. This may be a one-time courtesy to you.
While competition is a natural regulator of where a bank may apply fees and how much it thinks it can get away with, government authorities, such as the Office of the Comptroller of the Currency, stand by to field complaints and concerns from the public about fee-charging practices by banks.
Be careful who you accept checks from because you could be on the hook with your bank if they have insufficient funds in their accounts.
Let's say you deposit a check from a friend and immediately begin spending that money. If your friend's check doesn't clear, or bounces, you could be assessed a fee called a returned deposit charge. Once the deposit is returned and your account goes into the red, you could be exposed to overdraft fees.
Most have come to expect to be assessed a fee for making withdrawals from an ATM. To avoid them, you should take care that the ATM you use is in your bank's network. That's because the ATM owner will charge you a fee in addition to your bank potentially charging you a fee.
Unless you're married to small banking institutions like regional banks or credit unions, consider opening accounts at some of the big banks because they have far more ATM locations than their smaller counterparts.
Keep in mind some of the smaller institutions may reimburse you for any fees for making withdrawals from ATMs. There is also the option of getting cash back at merchants that allow it.
At point-of-sale terminals, use your PIN with your debit card and hit cash back. There are no fees for these types of withdrawals.
The neverending fee stream
There are a host of other fees banks may charge, and some of them may surprise and even anger you. For example, some banks charge you a fee if you don't use your account a lot or if you close it.
The logic behind being assessed a fee for closing your account relates to the costs banks say they incur. Nessa Feddis, vice president and senior counsel for the American Bankers Association, told U.S. News and World Report the following:
"There's a significant cost to opening and closing an account, and the banks are trying to recover some of their costs."
Other observers say banks impose early account closure fees to keep you from closing the account in the first place.
When deciding where to open an account and fees are an issue, it's best to contact a representative from the bank. Make sure you read the fine print disclosure statements, and clarify anything confusing with the bank.