Winner Ajibola
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Banking fees might seem small when you get a debit. But over time, they can accumulate to a significant amount. If you use traditional banks, you’d be familiar with the monthly debits on your savings or checking accounts.
Not only do they mess up your account balance, but they can make you feel like you’re paying the bank for keeping your money with them.
Perhaps the most aggravating part is that there’s no clear reason why you’re getting a debit for that purpose. You’d only see a reference note in the transaction.
In this article, we’ll explain six popular banking fees and the real reasons why they charge you for them. You’d also find an alternative way to avoid paying all these fees.
This banking fee is particularly common with checking accounts. Once you withdraw below zero, you’re required to pay a mandatory fee.
This might happen when you try to pay for a transaction with your debit card. We often lose track of our account calculations to the point where you might be trying to pay for a $120 transaction without knowing that you only have about $97 left in your account.
Instead of declining the payment and showing an insufficient funds error, banks tend to allow these types of transactions to go through.
They’d cover the costs and make a reconciliation once you have sufficient funds in your account again. However, asides from having a negative account balance, you also pay a fee for this service. That’s what is called an overdraft fee.
Overdraft fees vary from bank to bank, but it usually borders around $25-$40. The best way to avoid this is by signing up for bank alerts and keeping track of all your transactions.
We also recommend linking your savings account to your checking accounts. That way, when you’re likely to overdraw, the funds can come from your savings account instead.
Wire transfers are a way to send money directly from your account to another account electronically. They are very effective because you can seamlessly send money locally or internationally - especially when you don’t have direct access to the recipient bank.
And while they are a quick and easy way to transfer money, the convenience comes at an extra cost. Depending on the bank, you can expect to pay anywhere between $15 - $40 on a wire transfer.
We recommend that you only send Wire transfers when carrying out large transactions.
For petty transfers, you can either directly deposit the money to their bank account (if you have access to their banking information) or use virtual banking apps like Grey that charge lesser rates.
Read also: How to Open a Pounds Account as a Non-UK Resident
If you receive monthly bank statements in your mail inbox, they are unfortunately not free. While you can get your statement for a particular period via banking apps or websites to your email, you pay a certain amount for the number of pages incurred.
It’s important to note that not all banks charge you for requesting an e-statement. And even those that don’t charge at a fixed price.
It costs even more for customers who prefer to get a hard copy of their transaction history. This is because banks have to pay for paper and the costs incurred from mailing it.
Unfortunately, you cannot completely avoid this type of banking fee. However, you can reduce the amount that’ll be debited by requesting e-statements instead of physical ones.
We recommend that you generate e-statements only when needed and focus on the specific transaction dates you’d want to review to limit the statement’s pages.
A bank account can become dormant if it has been inactive for an extended period. Once it gets to this stage, the government controls the account based on the laws they have concerning such matters.
Due to the administrative work and regulations around managing such accounts, banks introduced dormant account fees to nudge customers into keeping active accounts.
So if you have any funds in an account tagged as dormant, you might start getting direct debits - most times, without prior notice. This monthly deduction will continue until the account is liquidated and closed.
Since the intent of these account fees is clear, you can avoid them by either choosing to maintain an active account or officially closing it. For the former, you can make regular transfers to ensure that your account doesn’t meet the criteria for dormant accounts.
If you’d prefer not to keep the account, migrate your funds (if any) to a preferred account and kindly contact your bank to close it officially.
Before panicking, you’d only be charged an account closing fee when you attempt to close an account too early.
If you open a new account within three to six months or less, you cannot immediately request that it be closed without paying an account closure fee. Although the fees are not exorbitant, they can mess up your final account balance.
So make inquiries from your bank’s customer service to find out the ideal window for closing accounts before closing yours.
When you keep your money, especially in a traditional bank, you pay a monthly maintenance fee, which is usually directly debited from your account. On checking accounts with low-interest rates, banks don’t make a lot from loans, so they need a way to ensure their revenue is balanced.
This is why maintenance fees are becoming increasingly popular. These charges vary, especially since accounts with more extensive perks pay higher maintenance fees when compared to regular accounts.
While almost every bank charges a maintenance fee, there are account exceptions. Usually, there has to be a minimum daily account balance, deposits, and debit card use.
This varies from bank to bank, so to meet these criteria, you must first find out what it is by asking your bank representative.
You might be lucky enough only to be susceptible to about two or three of these bank charges.
However, the best way to entirely avoid paying so much in banking fees is by opening a bank account that doesn’t charge so much in fees and offers cheaper withdrawal rates.
Grey is an online banking app that provides Africans with foreign bank accounts.
With a Grey foreign account, you can avoid some of the banking fees associated with traditional and domiciliary accounts. Some of the perks you stand to gain include;
And so much more. Enjoy low banking fees when you bank with Grey. Start by opening a Grey foreign account for free.
All you need is a smart device, reliable internet connection, a valid ID, and a recent utility bill. Sign up for free here.
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