Master Your Finances: A Guide on Bank Account Fees and How to Minimise Them
Do you know how much your bank account charges you in fees compared to others?
We are so ignorant of where our basic day-to-day money is going that it’s difficult to take control of our life design if we do not also take control of our finances.
There are enough tools and advice out there to tell you how to budget or what to spend your money on.
My journey has taught me that educating myself about finances is a good first step. So, let’s take it that simply and talk about financial literacy regarding the basics of having a bank account.
What I wish I’d known | Don’t just start an account where your parents are; do your own work and research to take responsibility for yourself.
We don’t like change.
On average, people tend to keep the same bank account for a considerable amount of time.
U.S. adults have been found to use the same primary checking account for around 16 to 17 years. 26% for more than 20 years.
Seniors keep checking accounts for about 26 years.
So even if we are not certain about what banking fees are and what we are being charged for, we hold on to our bank accounts because we are ridiculously loyal and changing all our payments and going through the hassle of creating new accounts is so overwhelming.
We are likely to switch accounts when going through significant life changes, moving (mortgage approval), marital or job status, and financial factors like high fees or inconvenient bank locations. (Though we don’t go to bank locations as much as we used to!)
(Caveat: Millennials (ages 25-34), on the other hand, are more likely to change accounts 2-3x more.)
Chequing accounts
The disparities in bank account fees can be significant.
In Europe, fees can vary significantly depending on the bank and the type of transaction.
For example, in Italy, account maintenance fees at the country's six main banks range between €28 and €154 per year.
This excludes other common transaction charges like money transfers, card payments, and ATM withdrawals. The average cost of these transactions has risen by around 15% in the past year, pushing the total cost of maintaining some accounts to approximately €200 a year.
Online-only accounts are generally cheaper, with some offering significantly lower or even no monthly fees.
How can you motivate yourself to change?
The first step is knowing there is a problem and wanting to take responsibility for it. So let’s start with, do you know what you are being charged?
STEP 1
Do you know what you are paying?
Review your main bank account and the bank transactions, and review the fees you have been charged in the past year.
What are you paying for deposits? Withdrawals? ATM fees?
List the different types.
Then, add up all the fees.
STEP 2
How many accounts do you have?
Review all your bank accounts and the fees you have been charged in the past year.
How much are your fees in each of those other accounts?
What are you using the different accounts for?
Do you believe it is necessary to have more than one? (Tip: the answer is no!)
STEP 3
Now start the comparison
Check other banks, are they comparable?
Do they offer the same functionality and accounts?
Are they cheaper or more expensive?
(For the most accurate and up-to-date information, it's best to consult directly with the specific banks or financial institutions in question.)
Based on your research, is it time for change?
You only need one chequing account. If you are ready to update or find a new bank account, here are the considerations:
Review your number of transactions and activity on the account
Find one bank or fintech or online bank that can provide that functionality and activity for less fees
Once you have selected your ideal account, open it
Move all your automatic deposits and payments to that one account
Close all the other accounts; you don’t need them any more
I mean it: close everything except this one personal account.
Why? Because it will help you keep track of your spending and your savings and know where your money is at all times.
You’re on your way…
Important Disclaimer: This content is for entertainment and educational purposes only. Nothing in the content materials shall be considered legal, financial, or actuarial advice. Raj Hayer is not liable or responsible for any actions, inaction, or direct or indirect result of your choices and actions.
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