One of the things I truly despise is the ever increasing bank fees we are subject to if we use our bank account. Since we absolutely need a bank account to function, I think it’s only logical for us to do whatever we can to save ourselves from paying these fees, which seem to go up every year. Here are some of the tips I use which have helped me save quite a nice chunk of change from bank fees:
Keep everything under the same bank
The ideal scenario is for you to have your bank account, mortgage, investments account, and credit card all under one umbrella. You see, doing transactions in between financial institutions is more costly than when done within the same bank. What you should do is shop around for a bank that offers you the most attractive offer for what you need, and then get everything else with them. Usually, they have offers such as opening an RSP account and this will waive all transaction fees on your checking account. Also, an added benefit to having everything under the same institution is that the processing time for your transactions will be much quicker, if not instant. So it’s more efficient and it saves you money.
Use credit card to make your purchases
Every time you use your debit card to make a purchase, it counts as a transaction. However, if you use your credit card, it costs you nothing. If you pay your balance in full each month, using your credit card will cost you absolutely nothing. You will only have one transaction, which will be to make your monthly payment, instead of having a transaction for every purchase you made. Of course, for this to work and not cost you a penny, make sure that everything you buy, you already have the money for in your bank account. You might want to read up my article How I Effectively Use Credit Cards, it will show you how you can benefit from credit card usage while saving you money and gaining rewards.
Keep funds in your account
Most accounts will waive all monthly transaction fees if you keep a certain balance in your account at all times. For example, I have one US account that requires only $900 in the account for all fees to be waived. In Canada, it’s usually a little more expensive, and I have one account that requires $1500 to get all fees waived. Here’s a little trick most people haven’t thought about: if you do not have the cash on hand to keep a certain balance in your bank account, borrow from your credit card whenever they send you an offer for a very low interest rate for 6-12 months. Put that money into your bank account, so that you do not pay bank fees anymore. Bank fees can vary from $5 and up per month depending on usage. Borrowing $1000 at 3% for example will cost you $2.50 a month, so you actually end up saving money by doing this!
Always keep cash on you
For this to work properly, you need to assess efficiently how much cash you may require on a monthly basis per say. Take out that amount once per month and keep it on you. Withdrawals are the most expensive banking transactions, and if you always go to the bank machine to take out money every couple of days, you end up paying tons of these expensive withdrawal fees (double the fees if you use a machine from another bank). If you do not feel comfortable carrying a lot of money in your pockets, just keep it in a safe place in your home and just carry with you the bare minimum. Using this tip along with the credit card tip I mentioned earlier, you then have only 2 transactions (one for taking cash out, one for making the credit card monthly payment) for the entire month!
Do your transactions in bulk
Yes, I get a little irritated when I am waiting in line to do my banking and someone in front of me is taking forever. However, the person in front of me is very smart. Doing every transaction you need to do in one shot saves you quite a bit in fees. Pay your bills all at once, and make your deposits all together. In regards to deposits, it’s very important to do it in bulk because the bank charges you a transaction fee, along with another fee per item. For example, my bank charges $0.85 per deposit + $0.05 for each item. If I had 5 items to deposit during the month, doing it one at a time would cost me ($0.85 +$0.05) times 5, or $4.50. Depositing all 5 items at once would cost me $0.85 + ($0.05 times 5), or $1.10. That’s a 76% reduction in fees. It’s definitely worth it, don’t you think?
By applying these techniques to your banking ways, you will ensure that you eliminate the cost of having a bank account at least by 80%, if not completely. Sure, you may not care about a dollar here and a dollar there, but if you were to look at it over a 12 month period, you would be saving between $60 and $200! Over 5 years, that’s close to $1000 in savings. Put this money back into your pockets where it belongs & stop giving the bank more money than you have to 😉