Is Your Bank Reducing Your Savings Balance With More Fees?

Written by , November 19, 2012

Is Your Bank Reducing Your Savings Balance With More FeesWith banks and credit unions paying such low interest rates on savings accounts, it seems like it’s more difficult than ever to grow the balances in our accounts. Adding to the challenge of increasing the value of your savings account is the fact that many banks are starting to impose new fees on some types of savings accounts.

In addition, in light of recent legislation that regulates and prohibits banks from charging certain types of fees, or fees above certain amounts, some banks have created new fees in order to replace those lost fees.

Here are some ways that your bank may be reducing your savings account by imposing too many fees.

  • Monthly Fees. There is no reason to pay a monthly fee for the privilege of maintaining a savings account at a particular bank or credit union. If your bank charges such a fee, take your business elsewhere.
  • Too Many Withdrawals. For some type of savings accounts, if you make more than six withdrawals or electronic transfers in a given month then you will be assessed a fee that could be ten or twenty dollars per additional withdrawal.
  • Third Party Fees. At some banks, if you try to exceed six transfers in a given month, then your bank may reject any recurring or automated payments you’ve set up. This might lead you to incur late fees or non-payment fees from the vendor you were trying to pay (such as for a home mortgage or student loan). While these fees aren’t imposed by your bank, they do directly arise from the way your bank administers your account.
  • Beware of Teaser Rates. If you sign up for a new savings account in order to benefit from “teaser” interest rates, make sure you know what the regular interest rate will be once the teaser rate expires. You might get a short term benefit from the teaser rates, but if your ongoing interest rate is less than you could get from another bank, then you might be losing out on more money in the long run. While the difference in interest rates isn’t a fee, it is something that will negatively impact your account balance, so it’s worth paying attention to.
  • Do You Have Multiple Accounts? If you have multiple savings accounts – such as one for your short-term savings, and another for your emergency fund, then any fees or additional costs per account would be multiplied by the number of accounts you hold. Instead, look to do business with a bank that will give you better terms for maintaining multiple accounts.
  • Account Closing Fees. Finally, avoid signing up for any new savings account that would impose a fee when you decide to close your account. While the amount of the fee might not be much, it’s largely unnecessary, and may indicate a willingness on the part of your bank to impose other fees as well.
  • Take a close look at the account terms – particularly the associated fees – before opening any new savings account. Remember that your account should be growing with the help of the bank, not getting smaller because of account and transaction fees.

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