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the lowest acceptable balance pursuant to the account terms (see below). Others impose a monthly service fee regardless of the balance, and some banks don’t charge a service fee at all, finding other ways to extract profit. Withdrawal and Transfer Fees. Many banks impose limits on the number and types of withdrawals and transfers that can be made on a savings account or money market account in a month. If the account holder exceeds the number of withdrawals or transfers, a fee is automatically deducted from the account. Overdraft Fees. Overdrawing your account means spending more money than you have in it, which pushes the account into a negative balance . In the case of an overdraft by check or automatic bill payment, a bank will usually cover the transaction in accordance with its automatic overdraft protection plan , but you will be charged a substantial overdraft fee . Overdraft fees are also referred to as Nonsufficient Funds Fee (NSF) . Overdraft fees range from about $30 to $35 per overdraft . Most banks will not authorize or pay ATM cash withdrawals or debit card transactions if there is not enough money in the account to cover the transaction. If you try, you will get the dreaded and embarrassing “Card Declined” message. Others will cover a small overdraft, but impose an overdraft fee. That’s right, overdrawing your account by even $1 can cost you $35. Minimum Balance Fee. A minimum balance requirement is the lowest dollar amount an account holder can have in their checking account without being charged a fee . Some banks have high minimum balance requirements, such as $1500. Some have low requirements such as $300, or even no minimum balance requirements. However, if the bank has a minimum balance requirement, it will measure it on a daily balance basis . As long as the account meets the balance requirement at the end of the business day, a fee will not be imposed. A fee for falling below the minimum balance requirement can be pretty steep — usually about $25.00. ATM Fees. Some ATMs are owned by your bank, so use of those is a free account benefit. Banks also contract with other banks for the purpose of having affiliated ATMs. Account holders can use an affiliate bank’s ATM without incurring a charge. Using the ATM of an unaffiliated bank will cost you — a lot. According to a 2014 Bankrate.com survey, the average fee per unaffiliated ATM transaction is $4.35. If you’re at the mall and decide you need some cash and use an unaffiliated ATM to withdraw $20.00, you may be paying a fee of over 20% just to use your own money! Reflect on Learning: Can you list common types of account fees that may be imposed by a bank? Service fee, maintenance fee, withdrawal fee, transfer fee, overdraft (NSF) fee, minimum balance fee, ATM fee. About how much will an overdraft set you back in fees? How to Avoid Bank Fees Until you are fully launched in your career and raking in the big bucks, you are bound to face many years of meager balances and lean times. Every penny counts. Don’t be giving away your hard-earned money to a bank! (Seriously, they don’t need it.) Fees and penalties charged by a bank can quickly eat away at the balance in an account. Here are some things you can do to develop good banking habits and avoid ugly fees and charges : Shop Around. Don’t settle for the first bank that comes along. A bank account is a product you can shop for. Do your research. Compare the products of different banks. Interest rates are often similar, but banks compete for your money by offering better or more liberal account benefits , such as no minimum balance PRODUCT PREVIEW
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THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY
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