Sometimes life happens. You need cash and you’re not near your own bank’s ATM, or you forgot to record a check in your register and you overdraw your account.
While many of us take a beating from our inner voice when we put ourselves in these situations, our bank accounts are taking more of a beating as well.
A survey by Bankrate.com finds that, on average, consumers are paying $4.52 when they withdraw money from an out-of-network ATM. The charge for non-customers withdrawing money averages $2.88% (up 2% from last year) and your bank will likely charge you a fee that averages $1.64.
“You can easily fork over $5 per out-of-network ATM withdrawal. Doing that once a week is needlessly wasting over $250 per year,” says Greg McBride, chief financial analyst at Bankrate.com. “Many smaller community banks, online banks, and credit unions belong to much larger, nationwide ATM networks that can be used for free. Check your bank’s website or mobile app for the nearest in-network ATM. If you’re really in a pinch for cash, get cash back when using your debit card.”
Heftier Fees for Overdrafts
The Bankrate survey found that overdraft fees (or now insufficient funds) rose 1% from last year, with the most common being $35. While the best way to avoid these fees is to keep good records, stick to your budget and live within your means.
Some consumer advocates feel the rates are too high and expect the Consumer Financial Protection Bureau to take action to protect consumers from rising fees this year. As for what actions consumers can take now, Bankrate recommends the following:
- Set up text alerts, if your bank allows, to let you know when your balance falls below a certain amount. Getting a low-balance text may be enough to help you stop swiping your debit card in time to avoid over-drafting.
- Try linking a line of credit or a savings account to your checking account to cover overdrafts. You still may pay a fee for the service, but it would be cheaper than an overdraft fee.
- Federal regulations require banks to let customers opt out of overdraft on debit cards. For most people, having their debit card declined when they don’t have the money to cover a purchase is preferable to incurring a string of overdraft fees.
In addition to rising ATM and NSF fees, Bankrate says never in the 12 years it has been doing the study, have so few banks offered free checking (defined as a checking account with no monthly fee, regardless of your balance or whether you do direct deposit).
The percentage of banks offering free checking with no strings attached fell to 37% in 2015, down from 38% in 2014. The average monthly maintenance fee posted a double-digit gain in this year’s survey, rising 11% to a new high of $5.86.
Shopping around may be your best shot at getting free checking if your bank imposes a monthly fee and you can’t meet the requirements to dodge it. Although many large banks have abandoned free checking, a lot of small banks, credit unions, and online banks still offer it, McBride says.