Buy Like Buffett: Getting Around Bank Fees
Maintenance fees are a big problem for many people since they deplete the amount of available funds in your checking account. These fees can be as low as $4 or as high as $20 a month just for the privilege of having a commercial bank account. These monthly maintenance fees can result in you having to pay hundreds of dollars a years in fees alone.
You can use a few of these tips to keep your account balance from dropping into the red.
Set up direct deposit
Most commercial banks will allow you to avoid minimum balance requirement fees by setting up recurring direct deposit payments. Banks typically require at least one direct deposit a month into a checking account to avoid this fee. This can be from a payroll check, Social Security deposit, or other federal payment. The minimum deposit amount required to avoid paying a minimum balance fee varies bank by bank. Ask your financial institution to find out how much your direct deposit amount must be to qualify.
Schedule automatic transfers
Automatic transfers are another way to get around being charged a monthly maintenance fee. These transfers are scheduled monthly transactions from your checking account into your savings account. The minimum transfer to qualify can often be as low as just $25 a month. The benefit of these transfers is twofold: You can avoid paying a fee to your financial institution each month and can increase the amount of money in your savings account at the same time.
Keep your balance high
Banks have re-instituted minimum balances on most commercial checking accounts. Minimum balances could be as a low as $300 or as high as a few thousand dollars, Falling below the account minimum will keep your account from earning interest and leave you liable to fees. Keeping your account over the monthly minimum required balance will allow you from triggering the low balance monthly fees.
Use automated options
Some banks charge fees for using banking services that require the use of a teller. Deposits, withdrawals and transfers that require you to speak with a teller or bank representative can trigger an account fee. Stick to using online banking services, ATM transactions and phone transactions that do not require you to speak with a representative face to face and are therefore free from fees.
Find out from your bank if there are additional ways to avoid paying monthly maintenance fees.
Mark Riddix is the founder and president of New Horizons Financial Management, an independent investment advisory firm that provides personalized investing and asset management consulting. Mark is a regular contributor to Seeking Alpha and has written financial columns for Baltimore and Washington, D.C. area newspapers. Mark publishes his own financial blog, BuylikeBuffett.com and has written the book Your Financial Playbook.