By Alex Thomas Salder, clarkhoward.com
It seems like pretty much everything comes with hidden fees these days — which is why it’s so important that you frequently check your bank and other account statements, because if you don’t, then you’re probably wasting a lot of extra money on fees you don’t even know about.
While there are some fees you just have to live with, there are many that you can avoid. You just have to know what they are, how to opt out and where to find the free alternative.
7 financial fees you should never pay
1. Credit reports
Due to the passage of the 2003 Fair and Accurate Credit Transaction Act (FACTA), all Americans are entitled to one free credit reportfrom each of the three major credit reporting agencies — Equifax, Experian and TransUnion — upon request every 12 months. There are several ways you can request yours, including online, by phone or by mail.
- Online: Go to annualcreditreport.com. This is the ONLY site that’s truly free. You’ll need to provide your name, address, birth date and Social Security number.
- Phone: (877)-322-8228
- Mail: Complete the Annual Credit Report Request form and mail it to the following address:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
2. ATM fees
ATM fees are seriously one of the biggest wastes of money — regardless of how convenient it may be. In fact, the average ATM fee is now up to $4.52!
The good news is you can avoid it. The first way is by using your bank’s ATM, but of course, there isn’t always one around.
A couple of examples are USAA and Charles Schwab. Plus, many of the credit unions that have large co-op networks offer free ATMs. Online banks and credit unions also refund some ATM charges per month
Many supermarkets will give you up to $200 at the register, fee-free. (This is a great way for stores to reduce cash on hand.) Sam’s Club allows you to get up to $100 cash back when you check out.
3. Money transfer
There are tons of ways to transfer money, both domestically and overseas, for free. Here are some of your options:
- Walmart is getting into the cash wire business with a new service called Walmart 2 Walmart. While the typical wire cost could be $50 to $75 from Western Union, this new program allows you to go into any Walmart store to the Money Center and send a wire of up to $900 for just $9.50.
- PayPal is another option. You can send money from your PayPal to another PayPal person by linking up bank accounts. This is significant because it allows you to send money overseas for free.
- Then there are also apps for smartphones that will let you send funds for free to another person:
So let’s say you’re at dinner and you want to split the bill. One person pays with a credit card or cash, but what do you do as the other party if you don’t have enough cash on hand to give them for your part of the bill?
That’s where something like Venmo or Square Cash comes in handy. You can send money to anyone you want for free, simply using an email address or phone number.
The one question is security on systems like Square Cash. But if you set a $250 maximum daytime cap, you can rest pretty easy.
4. Checking accounts
With more options available today, you can get a checking account that doesn’t require a minimum balance to avoid the fees.
So before you choose a new bank, make sure to do a little research on any and all fees associated with the account. NerdWallet has a great list that compares checking accounts from various institutions, including online-only banks.
5. Foreign transaction fees
Before you travel outside the U.S., make sure your credit card doesn’t charge foreign transaction fees, because they can really add up. Most credit card issuers charge 3% if you use their card outside the United States.
So look into cards that don’t charge these added fees. Capital One has no fees at all on their credit cards when used internationally. Ditto with Bluebird. Many smaller issuers and credit unions will also not charge these fees. Use those cards, or other another card that won’t charge you the fees, if you can. In addition, USAA has no foreign transaction fee, though there is a 1% MasterCard/Visa fee associated with their cards.
Using ATMs abroad is the most effective way to get money when traveling. But some banks will charge a foreign currency rip-off fee that usually starts at $9 or $10 per transaction!
If you’re with a big bank, check to see if they’re part of any alliance where you can use ATMs fee free in other countries. Simply tell them what country you’re going to and they can tell you if there’s a fee-free alliance partner bank there. You can also get fee-free ATM transactions abroad with most Capital One cards.
6. Credit card interest
The average credit card interest rate is around 16%, according to Bankrate. But some cards can carry rates as high as 30%.
If you don’t pay your bill in full every month, interest charges can start to add up very quickly. And the longer that debt just sits there — continuing to add interest to the total principal you already owe — the more difficult it becomes to pay it off.
The goal with credit cards is to only purchase what you can afford to pay off in full every month, because otherwise, you’ll end up wasting a lot of extra money on interest over time.
7. Overdraft fees
Overdraft fees now cost on average $32.44 per occurrence, which means if you have a few transactions go through once you overdraft your account, you could pay multiple fees.
If your bank encourages you to allow overdraft fees, don’t do it. It’s just another way they’re trying to make money from you. In fact, many people allow their bank to charge these fees without even realizing it.
So to avoid the extra costs, tell your bank you want to opt out of overdraft fees, and then when you try to make a purchase and there isn’t enough money in your account to cover it, the bank will just refuse the transaction.
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