This Simple Banking Mistake Is Costing You Millions
Banks make more than $2 billion annually on ATM fees alone.
Did you know that the Top 3 Banks made $233 Million in the first quarter of 2015 on consumer deposit fees at the ATM? That’s just for depositing money at the ATM. You are paying the bank to take your money. That’s a projected $932 Million a year just being handed over to those 3 banks. This comes directly out your pocket. Actually, that part of your deposit never reaches your bank account.
...why couldn’t I get better at racking up digits in my bank account?
I consider myself a hobby gamer. I grew playing video games, from getting my first Atari 2600 to my son’s Xbox. The object of all the games was to rack up points in some form or fashion. These are just digits you see on the screen. These days I rarely carry that much cash on me. Why? Because sometimes it just easier to use that plastic card. So when checking my account balance online, or from my phone, I’m looking at digits. The bigger the digit the better! But I digress. In the games, sometimes you lose points for performing poorly. So you learn not to make those mistakes to maintain a positive score. So that got me thinking, I’m pretty good at racking up digits on a video game, why couldn’t I get better at racking up digits in my bank account? To start, I decided to be sure that I am not giving money away by making some of the simplest banking mistakes.
Looking down my bank statement, I see these little fees for $5 or $2.50. They are transaction fees made at an ATM. I recall pulling out $60 at the machine, I was charged $3. I just paid 5% of my $60 to access my money. Couple that with what the state and government takes out that $60 probably represents what is left over of $120 that I originally earned. But it doesn’t stop there.
There are lots of bank fees that you are agreeing to pay. Either wittingly or out of naivety. Now days, I avoid driving by my bank just in case there is some sort of drive by fee I am not aware of. The paltry interest that you earn for letting the bank have your money is sucked up many times over by all these fees. One thing to be aware of is that banks make an absurd amount of money from NSF (Non Sufficient Funds) fees.
What Can You Do?
Just by being aware of charges such as ATM fees can help you save a lot of money over the course of a year. It really does add up. Imagine that you use the ATM twice a week being charged $5 per transaction. That’s $40 a month, and $480 a year. That’s the price of an Xbox! Or a tank of gas a month.
The first step to avoid paying more then you have to is simply being aware of what fees you are charged by using the bank you are at. Some banks are better than others!
An easy way to avoid racking up ATM Fees is to get cash back when checking out at the grocery store. Most of your local supermarkets allow you to pull out a certain amount of cash from your debit card at the time of checkout. You can also plan ahead and sticking to a weekly budget. Over time, you this can save you quite a bit of money.
The Consumer Protection Bureau (CFPB) has this tip for avoiding ATM Fees:
“Generally, use your own bank or credit union’s ATMs – most banks or credit unions charge no fee for this service. Usually, when you use another bank or credit union’s ATM, both the operator of the ATM and your bank or credit union charge you a fee.
Some banks and credit unions offer to rebate ATM fees for customers that maintain high average balances. Check with your bank or credit union to find out what ATMs you can use without an additional fee.”
Try to locate your bank’s ATM machine on your smartphone.
Look for free checking accounts. If you notice that you are being charged a fee for a checking account that was advertised as free, complain to your bank about the issue. If that doesn’t work you can always submit a complaint to the CFPB.
Review all the fees your bank can levy against you. In the end, you may just end up moving to a better bank. Overall, you’ll be saving money that could go to benefit you and not someone else.
Here are some facts to be aware of from the banking section at The Motley Fool:
- More than $1 trillion is currently in low (or no) interest checking and savings accounts.
- ATMs currently charge fees as high as $5 for a single transaction. Banks make more than $2 billion annually on ATM fees alone.
- There is virtually no use at all today for the inappropriately named "savings" account, yet it remains one of the most popular ways for Americans to store their money.
In this article I focused on ATM fees, mainly because it’s the most commonly overlooked fee that can be avoided. However, be aware that every time you perform an action online, at your bank branch or make a transaction you may be getting “charged a fee for that”.