How to avoid costly unexpected bank fees
Overdraft/NSF revenue often varies based on seasonal patterns, but it trended downward throughout the first nine months of 2022
(InvestigateTV) — While banks’ overdraft/non-sufficient fund fee revenue has declined significantly compared to pre-pandemic levels, financial institutions still collected more than $5.8 billion over the first three quarters of 2022, according to the Consumer Financial Protection Bureau (CFPB).
Nathan Grant, a senior finance industry analyst with Money Tips, said a bank overdraft fee is one of the most common and expensive unexpected charge that impacts consumers.
Grant said overdraft or NSF fees can add up quickly if you don’t check your account regularly.
“Some banks have low balance alerts that you can get notified when it’s getting close,” he explained. “And then there’s overdraft protection options at certain banks that are either going to when you do overdraft, they’ll pull that money from either a savings account that you’ve tied it to or a line of credit.”
Grant said another common fee is ATM related. Withdrawing money from an ATM could incur not only a fee from the machine, but also a fee from the bank for using an out-of-network machine. One way to avoid those fees is to use a mobile pay app or a mobile wallet.
“But when you pay with a mobile wallet, even if it’s your debit card tied to it, it creates what’s called a token. It’s tokenization. And that number is just a randomly generated number for that sale or that transaction,” he explained.
Grant added that mobile wallets provide added security, in addition to the benefit of not having to worry about paying an ATM fee for withdrawing cash.
Another common charge: late fees.
Grant suggested setting up automatic payments for the minimum amount at the very least.
The American Bankers Association has more tips on how to avoid most banking fees.
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