Rising costs are causing many consumers to cut back on spending to meet needs. But one area they may be neglecting: their checking account fee.
According to a new Bankrate reportmore than 1 in 4 account checking Holders are still paying bills every month—and for nearly half of them (48%) it comes at the high cost of sacrificing savings for emergencies and debt payments as a result.
How much are Americans losing to checking account fees
So how much are you really losing in checking account fees? According to a Bankrate report, those who pay checking account fees lose an average of $24 per month, or $288 per year.
In addition, the younger generation has less income and has less net worths compared to the older generation pay more monthly payments. The report revealed that 46% of Gen Zers and 42% of Millennia pay a monthly fee, compared to only 22% of Gen Xers and 14% of Baby Boomers.
While an extra $288 per year may not seem like it will make or break your fortune, if invested correctly and early or put into a high-interest savings vehicle, it can become significant.
Say you decide to put $24 in a high yield savings account with 3.00% APY. If you took the average amount paid in bills (per month) by most Americans and put that money into your savings account each month, in five years you would have over $1,500 in the bank, give or take depending on whether how interest rates fluctuate. time.
Many put bills ahead of other financial goals
Additional fees can get in the way of hitting important financial milestones.
If it weren’t for these checking account fees, those surveyed said they would have other ideas about how they would use those funds such as debt repayment (30%), saving for emergencies (29%), saving for an important financial goal like buying a house or car (26%), and saving for retirement (17%).
In addition, 31% of account holders pay these additional costs to avoid the hassle of switching accounts and switching to a new one. bank or credit union. When it comes to financial institutions, the report shows that loyalty is paramount—the average checking account holder has been with their bank or credit union for 17 years.
However, even the most loyal customers should monitor the terms of their accounts and be aware of any possible charges they may incur.
Common fees you may overlook
- Monthly fee for interest-earning checking accounts: $16.19
- Monthly fee for non-interest-earning checking accounts: $5.44
- Overdraft fee: $29.80
- Non-sufficient fund (NSF) fee: $26.58
- Out-of-network ATM withdrawal fees: $4.66
- Paper statement fee: $1–$5
“Before opening a checking account, it’s important to look at the fine print of your bank agreement,” said Bankrate analyst Sarah Foster. “And if you’re someone who’s banking with the same financial institution just because it’s the bank you’ve always been with, be sure to check your statement regularly to see if there are any fees you’ve been charged.
4 ways to save on bills
If your account fees are putting a dent in your monthly income, consider these three strategies to reduce or eliminate them entirely.
- Buy a free checking account. Not all checking accounts charge a monthly fee. In fact, 73% of checking account holders take advantage of free checking accounts and pay no monthly fees, according to the report. Shop around and take the time to read the individual account terms carefully. If you need some pointers, check out our list of 10 best free checking accounts.
- Depending on the fee, you may be able to ask your bank to waive the fee. Each bank has different rules and guidelines, but some may be willing to waive a fee if it’s your first time overdrafting or if you’ve been charged in error. If you see a charge on your statement, consider calling your bank to ask them if they are willing to work with you and waive the charge.
- Try to maintain a balance in your account to avoid overdrafts. Not all checking accounts are free, but some will waive your monthly fee if you meet certain requirements such as maintaining a minimum balance, having a certain number of qualifying charges per month, or enroll in direct deposit. Read your account terms to learn about any other ways you can get your monthly payment.
- Sign up for paperless statements. Many banks charge a fee to mail you paper statements. If you want to throw it in the trash, consider opting for e-statements to save a few dollars each month.
These are just a few small ways to reduce your monthly expenses, but many big changes could be coming. Lawmakers have noticed the rise in bank fees and are starting to act. In 2022, President Biden called on all agencies to reduce or eliminate hidden fees, charges, and add-ons for everything from banking services to cable and internet bills to airline and concert tickets—calling them “junk fees.”
“The possibility of a eCONOMY this year remains one of Americans’ biggest fears, and any downturn could bring pain to your wallet on top of already high inflation and interest rates. In unusually uncertain times like these, experts recommend releasing whatever cash you have to recycle back into a emergency fund,” said Foster. “But before cutting the cable cords or ditching a streaming service or two, switching to a no-fee bank and eliminating checking fees may be a much easier place to get started.The one-time task of switching your account is worth the long-term benefit of added security.