No one likes to pay hidden fees. Yet, Americans are paying billions of dollars in bank fees each year. Bank and credit card fees in particular can be sneaky because they’re often unclear or occur in small amounts.
Still, certain fees can add up over time and eat into your disposable income. Even $5 to $10 per month could make a significance over the course of 10 to 20 years. Plus, you probably have better things to do with your money.
Here are some common banking and credit card fees to watch out for and how to avoid them.
Top Banking Hidden Fees
According to a 2019 Go Banking Rates survey, 35% of respondents said they wanted to save more money, but 88% said they weren’t considering switching banks. If your bank is charging any of these fees below, consider talking to them about cutting them or switching financial institutions altogether to save.
Monthly Maintenance Fee
If your bank charges a monthly maintenance fee, it may be time to run. These fees are completely unnecessary since you can bank for free. The average monthly maintenance fee for banks is around $14. This $168 per year.
I used to pay a monthly fee, but then I realized there are other options and switched banks. Most online banks like Capital One don’t charge a fee.
Other times, your bank may charge if you don’t meet a certain minimum balance limit each month. So keep an eye on this and ask them to drop the fee or switch if they refuse to stop charging you.
The average overdraft fee is $30 to $35. Banks made $11 billion in overdraft fees in 2019. To avoid over-drafting, make sure you’re following a monthly budget and tracking your spending. That way you can make sure you have enough in your account to cover bills and automatic withdrawals.
You also may be able to enroll in your bank’s overdraft protection program. This will help prevent you from over-drafting by allowing your bank to either take money from a connected savings account or simply rejecting the purchase if you don’t have enough funds.
Again, there are banks that don’t have overdraft fees at all.
ATM fees typically range between $2 to $4.50. The key to avoiding ATM fees is to only use in-network ATMs and alternative methods to withdraw your money. If you use your bank’s ATM or one that’s in your network, you shouldn’t be charged a fee to withdraw your money. However, if you are not near your bank or an in-network ATM, consider getting cash back at a store.
If you have to make a purchase anyway, remember to ask for cash back so you can withdraw money from your bank account. Even though you’ll still be spending a little money, at least you’d get something in return instead of paying a pricey fee.
You can also see if your bank offers ATM fee reimbursements. This is common but so few people check to see if their bank will pay them back for what they spend on ATM fees.
Top Credit Card Hidden Fees
Carrying a credit card can be costly if you carry a balance and don’t watch out for fees. Despite what rewards you may earn, it’s important to make sure you’re avoiding these hidden fees as well.
Does your credit card have an annual fee? These fees can sneak up when you least expect it because let’s be honest, most people don’t remember when they started using a new credit card.
Plus, your credit card company may waive the annual fee during the first year. You may find luck by asking if they can waive the fee each year. Otherwise, make sure you track when your annual fee is coming up and see if it’s worth it.
Most of my credit cards don’t have an annual fee because they can range between $95 to $400. However, I do keep one annual fee because one of my cards provides me with a free hotel stay each year and that’s worth it to me.
Credit card late fees can range from $29 to $35 and they occur when you don’t make a payment on your monthly statement or at least pay the minimum. For me, this could represent a small household bill so it’s not fun to pay. Set a reminder for when your credit card bill is due each month or set up auto-pay.
I like using auto-pay because it ensures I never have to pay a credit card late fee. Even if I forget to manually pay my credit card for the month (which rarely happens), I’ll automatically get charged the minimum balance and avoid late fees.
Foreign Transaction Fee
This is another hidden fee to watch out for if you have a credit card. If you use your card while traveling, you could be slapped with a foreign transaction fee of up to 3% of the purchase price amount.
Or, you could even pay this fee if you’re paying for a service or product that’s out of the country. If you know you’re going to spend money out of the country, check to make sure your credit card doesn’t have foreign transaction fees.
Of course, if you don’t pay your credit card balance in full each month, you’ll incur a finance charge based on your interest rate. Credit card interest rates are high, which why it can be difficult to get out of credit card debt once your balances add up.
Make sure you are using your credit card wisely and only spending what you can afford to pay back at the end of the month. Be doing this, you can still keep your rewards and perks while also avoiding costly interest charges.
Avoiding bank and credit card hidden fees is easy once you identify what they are. Remember, there are so many low fee options out there so you can always switch companies if you find a better fit.
Cutting out bank and credit card fees can save you thousands over the span of your life so be proactive when cutting these expenses.