Money

4 Ways to Outsmart Sneaky Bank Charges

Keep your money where it belongs!

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Noticed your banking services are costing you more than usual? You may have fallen into common traps designed to make banks more money. Here are the easy steps to avoid them and keep your cash where it belongs — in your wallet!

Check your credit limit.

A new report reveals that banks have been increasing credit lines without notifying cardholders. And research shows you tend to spend the same percentage of your credit line no matter how much it is — so if you carry $4,000 in debt on a $5,000 limit, you’ll end up carrying $8,000 if the ceiling is raised to $10,000. You won’t realize it went up, but you’re able to spend more.

The fix: Check your limits regularly and set a budget based on your income, debts and regular expenses. This way, you avoid accidentally overspending.

Nix overdraft protection.

Almost all of us have had an overdraft — we withdraw cash from our account and our balance falls below zero. One survey found that 66 percent of us are unaware that fees charged for these mistakes are optional! By law, when you have insufficient funds for debit card purchases or ATM withdrawals, banks can only deny the charge, they can’t charge a fee. But when you opt in to overdraft protection, they can legally charge you a fee of up to $100.

The fix: Call your bank and opt out of overdraft protection, or sign up for free low-balance alerts so you’re aware when your account is close to zero.

Link bank accounts.

When it comes to checks and electronic bill payments, banks can charge a fee if there aren’t enough funds to cover your payment, even if you opt out of overdraft protection.

The fix: Ask if you can link a second account to your checking account (such as your savings) and authorize the bank to transfer money from it to cover any shortages. Or apply for an overdraft line of credit, a short-term loan with fees that are far less than overdraft penalties. These can save you from late or bounced check fees from businesses you paid by check or automatic payment.

Renew your account type.

Tired of paying bank fees but don’t want to switch banks? Changing the type of account you have can help. Sure, banks offer checking and savings accounts, but most also offer a variety of each to suit your personal needs.

The fix: Since banks regularly roll out new types of accounts, if it’s been more than a year since you reviewed the options at yours, call and ask what they offer. You could opt for one where you pay a monthly maintenance instead of constant fees, get fees waived by making a minimum number of transactions per month or earn more interest by maintaining a minimum balance.

This story originally appeared in our print magazine.

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