For most of us, agreeing to terms and services means scrolling through a slew of legal jargon until we find what we’re really looking for: the “I agree” button.
Like nearly 99% of users, I know I’m doing myself a disservice by agreeing to policies I haven’t read, but I do it anyway. When I set up my first bank account and applied for each of my credit cards, I agreed to whatever they were offering without so much as skimming the fine print. How bad could it really be?
I’ve been fortunate enough (so far) that this has never come back to bite me, but while working in the financial industry, I have seen people lose money every day to avoidable charges.
Here are a few general rules to keep your precious dollars in your hands and never get another bank fee ever again:
Your checking and credit card accounts should be free.
There are very few exceptions to this rule, although many banks might beg to differ. Even as bank fees are ramping up, I am steadfast in my belief that no one should willingly pay a bank fee ever.
If your accounts aren’t free, it helps to understand why. Your relationship with the bank is meant to be mutually beneficial (albeit with the bank at an advantage); you receive services and some dividends, while the bank gets to lend and/or invest your deposit dollars. If you are getting charged a monthly fee, it means the bank isn’t able to make money from your account to recover the costs of providing services to you and to make a profit. The fee is there to make your accounts lucrative for the bank no matter what.
This could be happening to you for several reasons, but it varies between financial institutions. In most cases, your bank account balance might be too low (no money in your account = no money for them to lend) or you aren’t using enough of their services (things like loans, paperless statements, credit cards, and so on.). If you’re unsure what the reason is, don’t be afraid to ask what the fee is for and how to avoid it in the future. Your bank wants to keep you as a customer, so in most cases they will work with you to make sure you’re happy.
If your credit card is charging an annual fee, there’s a reason for that, too. Annual fees are typically in place for cards that offer snazzy rewards. The only time it makes sense for you to pay this fee is if you’re getting more out of the card than you’re paying for it. If you’re getting cheap flights and free hotel stays, calculate the dollar amount those are worth and compare it to what you’re paying to have the account. If you aren’t recouping the cost of the fee in sweet perks, kick that card to the curb.
Know your interest rates and pay loans according to what makes sense for you.
It amazes me how many twenty-somethings are oblivious to the interest they are paying on their loans. A credit card company may have lured you in with the promise of zero percent interest for a limited time, but that time runs out eventually and they could be charging you a painfully high interest rate, preventing you from ever making progress on the principle balance. I look at interest charges on consumer loans about the same as a bank fee: it’s totally unnecessary to have an account with these fees.
If you carry a balance on a card with high interest, look into a balance transfer. This nifty NerdWallet page helped me find the card that best suited my needs. Once you know your interest rates, attack your debt according to what makes sense for you. There are several ways to successfully amortize the hell out of your loans, but it’s easiest when interest charges aren’t eating up all your payments.
Know your due dates.
Setting up auto-pay makes it easy to never miss a payment, but it’s imperative to know exactly when these payments will be coming out of your account. If your monthly Hulu payment tries to come out of your account and you don’t have enough money, the bank will almost certainly charge a fee for the returned payment. The fee could even end up being more expensive than your Hulu payment, and your subscription will be put on hold so you can no longer binge-watch Seinfeld. What a nightmare.
If their options aren’t working for you, negotiate.
If you feel like your situation is hopeless and you will never get your financial life together, don’t be afraid to ask for what you need, whether it be a lower interest rate, a refund on a fee, or for a one-time exception to a policy. The worst they can say is no, but in many cases (especially if it’s your first fee of this kind), they’ll gladly work with you.
If all else fails, move your accounts to greener pastures. There’s no rule saying that you have to stay loyal to the same bank for life. It’s simple to change where your direct deposit goes and which accounts your automatic payments come from, so there’s really no excuse to remain complacent in the face of excessive fees. Talk to friends and family or consult your city’s subreddit to get the inside scoop on where you can get better, free service.
All of this boils down to one idea: you have to take responsibility for your accounts.
No one is babysitting them for you. It’s up to you to understand how your accounts work and what you have to do to prevent fees. Set up online banking and log in once per week at a minimum. Even better, set up text alerts so you know when you have a low balance or a payment coming out.
These small efforts will add up to huge savings for you in the long run, and you’ll be padding your own pockets instead of the bank’s already-deep pockets.