Pay Attention to those Fees

It’s certainly easy to understand why we tend to ignore banking and financial fees and expenses. When looking at the big picture, we’ve simply gotten used to them. We accept them as minor annoyances: a necessary evil stemming from the format of our monetary lives. But those small fees and expenses can add up much more quickly than most people realize, and end up taking a real bite out of one's overall savings strategy. We must get a handle on those routine "costs of doing business, and a good place to start is with the little things, things that we have the power to control.

For the past quarter century or so, banks have been aggressively moving to generate a greater portion of their revenues through fees, ranging from ATM and loan-processing expenses to penalty-type fees such as those associated with late payments on credit card bills. In actuality, they're doing what we as consumers should be doing: they're focusing their efforts on things that they can control, and they're succeeding wildly. In 1976, fee income for banks represented only 18 cents of every dollar of operating revenue that they generated. Today it's much closer to around 50 cents. And here's another staggering number that you should be aware of: only taking into account basic banking fees, such as those for credit cards and ATM usage, consumers pay out hundreds of billions of dollars yearly to financial service companies. Yes, that's hundreds of billions.

Given these facts, it's clearly in our best interest to diligently comparison-shop among financial institutions and service providers based not only on such intangible considerations as convenience, familiarity, and brand loyalty; but also upon the fees that they charge. Of course, there's nothing at all wrong with choosing a bank because they have a branch located two blocks from your home or across the street from your place of work, but you must also consider the costs of doing business there as well. After all, you shop for the best deal when buying other things such as clothes, food, furniture, or airline tickets. You'll be dealing with your financial institution on a monthly, weekly, or even daily basis; the fees that they charge you will generally recur, and add up quite handsomely (for them, that is).

The routine goods and services that banks offer – checking account maintenance, the availability of cash through an ATM machine, check printing, and loan servicing – are done in essentially the same manner by every financial services provider. Certainly, one bank may offer better customer service than another; others may tout superior online banking services. But at the end of the day, the way that they handle your money and the checks that you write are basically the same. Therefore, the fees, rates, and prices they charge should be of paramount concern to you when selecting which to do business with.

There are more types of bank fees to be wary of today than ever before. In addition to monthly service fees, we're hit with account balance minimum fees, nonsufficient funds fees for bounced checks, per-item fees for writing too many checks, teller fees for using the services of a bank teller, online-service fees (for not using a teller), and bill-pay fees for using the bank's system to electronically pay your bills. And let's not forget check-printing fees, lost debit card replacement fees, wire- and currency-exchange fees, money order fees, telephone banking service fees, account research fees, and fees for retrieving a copy of an old check.

Billions. Certainly it's unlikely that we can avoid every fee that's charged to us. But we can watch our financial affairs more closely and significantly reduce the amounts that we pad our banker's coffers with. How? Don't bounce a check. Take larger amounts from the ATM to reduce the frequency of your visits there. There are plenty of little adjustments that we can all make to keep more of our money in our own pockets. It's simply a matter of greater awareness on our part and better financial discipline.

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