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Columns | Go Far With Kovar

Is it Possible to
Avoid Bank Fees?

by Taylor Kovar
Hi Taylor - What's the deal with bank fees? I've been thinking about closing my Chase account because I don't like all the extra charges, but I don't know if there's a better option out there. Is every bank trying to steal my money? - Jenny

Hi Jenny - I won't go as far as to say every bank is trying to steal your money, but most of them certainly want to take as much as they're legally allowed to. I'm glad you asked this question, because I think it's important to understand the reasoning behind these costs. When you know why the money is being taken, you have better odds of doing something to get the fees waived.

One charge that a lot of people don't understand is the minimum balance fee. Why should I be charged extra for not having a lot of money? It seems counterintuitive, and it certainly isn't ideal for the customer. Banks need to have sufficient capital to cover all sorts of costs while still keeping a lot of cash available for consumers. If you open a checking account with limited funds, you're not helping the bank cover it's own operating costs, so the bank uses fees as an incentive for you to deposit more money. You might not like it, but that's the reality with most of the big banks.

Smaller, online companies are typically better about limiting account balance fees, because they have fewer overhead costs and fewer people to answer to. If you're looking to keep a small account and avoid getting dinged by the bank, you should consider using an online company.

As for the specific fees, like overdraft and ATM withdrawal, those are hard to escape. Overdraft charges can feel very unfair, especially when you overspend by $.05 and then get charged $25 or more. Unfortunately, that's the price you pay for asking the bank to cover a purchase made with insufficient funds. If you think of it as the processing fee for a loan, $25 is relatively inexpensive.

ATM fees get charged by both banks and ATM owners, and it's really just the universe's way of saying, "don't forget to take out some cash when you go to the bank." When you force Chase or Wells Fargo to access your money through a third-party vendor at a gas station, you can expect the company to ask for a couple bucks in return.

In general, it's not easy to avoid bank fees. These companies want you to behave in a certain way, and they'll try to charge you every time you shake things up. The key is finding a bank that meets your needs, then speaking with an accountant to see what you can do to avoid certain charges. As long as you're reasonable, you should be able to work something out. Good luck, Jenny!
Taylor Kovar August 24, 2018
More "Go Far With Kovar"

Disclosure: Information presented is for educational purposes only and is not an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance. To submit a question to be answered in this column, please send it via email to Question@TaylorKovar.com, or via regular mail to Lessons on Wealth, 106 E Lufkin Ave., Lufkin, TX 75901.

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