Plugging holes in your checking account

Max Heine

In case you haven’t noticed, banks are in it for the money. Not just making money off yours and mine, but skimming and squeezing every little bit more they can in fees and penalties. Since you’re not actually pulling currency out of your wallet to pay these fees, you don’t know how much you’re giving up unless you’re paying careful attention.

And if paying attention is too difficult because you’re on the road too much, note the figures at left from Bankrate.com, the leading consumer finance rate website. Its last tally (late 2007) of these costs found that most have gone up. Here are some options for fighting back.

QUIT PAYING OVERDRAFT FEES. This is one of two fees that are “most punitive” and that can also be eliminated, says Laura Bruce, a senior Bankrate reporter. If you’re prone to float checks, figure out the weakness in your system and correct it – whether it’s bad math, failure to record checks or difficulty in knowing your balance when it’s time to write a check. The insufficient-funds fee is approaching $30, Bruce says.

QUIT PAYING ATM FEES. This is the other biggie. Actually, it’s two fees that total about $3: one charged by the bank owning the ATM, the other charged by your bank, Bruce says. If your hauls are so long that taking enough cash is impractical, use a credit card for larger expenses – but use it responsibly, avoiding interest payments.

GET A FREE CHECKING ACCOUNT. Even a free-checking plan that charges after a certain number of checks per month is good if you’re not writing too many. By all means, avoid interest-bearing accounts that require a minimum balance, Bruce says. Drop below the minimum once, and the monthly fee likely will exceed the paltry interest yield for the entire year.

MOVE YOUR BUSINESS TO AN ONLINE BANK. ATM junkies, take note: Some online accounts (as well as select brick-and-mortar banks) reimburse up to a certain amount, such as $20, for ATM transactions with other banks’ ATMs. Bankrate’s survey shows other advantages of online banking, too, compared to brick-and-mortar banks: Internet banks pay much more in interest, their monthly account fees are far lower, and they require far less money to open an account or to maintain the minimum balances.

If you’re in long haul, own a laptop and are as comfortable getting online as you are shifting gears, an Internet bank offers the advantage of enabling you to stay on top of your financial business daily. The same holds for having online accounts with regular banks.

MOVE YOUR BUSINESS TO A CREDIT UNION. Thanks to tax advantages granted decades ago, credit unions generally charge less in fees and pay more in interest-bearing accounts than commercial banks, though the spreads aren’t as much as with Internet banks. Credit union “membership” definitions have broadened so much that virtually anyone can join one now.


Checking checklist
These average figures from Bankrate.com’s fall 2007 survey show how easy it is to rack up sizable checking account fees, and how interest-bearing checking accounts at regular banks are often a bad deal.

$28.23
Bounced check fee.

$1.78
ATM surcharge for out-of-network use. Add $1.25 for your bank’s fee on the transaction.

$155
Balance required to avoid fees on a non-interest-bearing checking account.

$3,317
Balance required to avoid fees on an interest-bearing checking account.

$11.72
Monthly fee on an interest-bearing checking account.

$2.91
Monthly fee on an Internet bank’s interest-bearing checking account.

0.32%
Yield on an interest-bearing checking account.

2.7%
Yield on an Internet bank’s interest-bearing checking account.

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