Reduce your bank fees
Trim your bank fees
We all need and use financial products – everything from everyday bank accounts to credit cards. And with some smart strategies it’s possible to trim the fees you pay.
Many regular account fees can be kept to a minimum simply by shopping around and finding the account that best suits your style of banking.
However you may also be charged ‘exception’ fees’ – sometimes termed ‘penalty’ fees. These sorts of fees can be avoided altogether simply by knowing the types of events that could trigger an exception fee. Take a look through the terms and conditions applicable to the financial products you use for a complete picture of the types of exception fees involved.
Cutting the cost of everyday accounts
No one likes paying bank fees but a few simple steps can mean big savings on the charges you pay.
Reducing regular account fees
The steps outlined below can help to reduce the cost of your everyday bank accounts.
Match your account to your style of banking
Knowing your own banking style will help you determine the account that is best suited to your needs. Check to see which sort of account user you are:
Banking electronically – using ATMs, EFTPOS and the internet is far cheaper than using an over the counter service. Some banks do not charge at all for electronic transactions made within Australia.
Avoid foreign ATM fees
“Foreign” ATMs are those machines that do not belong to your bank or a network your bank is affiliated with. Every time you use a foreign ATM you can be charged a fee of around $2. In addition, your own bank may charge a separate fee. It can make ATMs an expensive source of cash withdrawals. But there are ways to reduce the cost.
Making the effort to track down an ATM belonging to your bank can generate valuable savings in ATM fees. If there isn’t an ATM branded by your bank available, try making cash withdrawals when you use EFTPOS to make purchases. The two transactions are only counted as one by your bank, so you pay a single fee instead of two. It’s an easy way to get two transactions for the price of one.
Alternately many large retail chains will let you make a cash withdrawal at no charge even if you don’t make a purchase.
Using a budget to plan your cash spending will also help you minimise the need to withdraw cash more than a few times a week
Avoiding exception fees
With good money management, exception fees are avoidable.
Your bank will set out any exception fees in the terms and conditions for the financial products it offers. Always read this information to ensure you are aware of the sort of events that can result in a fee being imposed. Below are some common events that can trigger exception fees – along with ways to avoid them.
Insufficient funds to cover a payment
Holding insufficient funds in your account to meet a direct debit or a cheque payment can result in a ‘dishonour’ fee. There are some easy ways to avoid this:
Overdrawing your account
Withdrawing more funds than you have available can result in an unauthorised overdraft fee. To avoid this type of charge:
Cutting the cost of credit cards
Credit cards can involve a number of fees – some of which relate to the provision of the card (for example annual card fees) and some of which relate to the way you manage it (exception fees). Having a clear idea of what you want from your credit card can help you reduce card fees. Staying on top of your card spending will help reduce the risk of incurring an exception fee.
How to reduce card fees
Shopping around for a good deal will help you get value for your credit card.
Not all credit cards charge annual fees though as a general rule, the cheaper the card, the fewer features the card will offer. Paying an annual card fee can entitle the cardholder to extras like free or discounted travel insurance. However always read the fine print to discover whether or not you will benefit from paying annual card fees.
Ways to avoid exception fees
With sensible management of your credit card spending and repayments, it is possible to avoid exception fees altogether.
Always read the terms and conditions of your credit card to understand what sort of fees you may be charged.
Over the limit fees
Exceeding your specified credit limit may result in a fee being charged. Do note, your card may be accepted by merchants even when you have exceeded your limit, so it is up to you, the cardholder, to be aware of your outstanding credit balance.
You should receive a monthly credit card statement in the mail –always review this to ensure the transactions that appear on it have been authorised by you. While this statement will give you an idea of how much you owe on your credit card, a more up to date balance should be available over the internet. Check this regularly, or whenever you are unsure about your level of available credit.
Late payment fees
Your regular credit card statements will specify the repayment required on your card each month, and when the payment is due.
Failing to meet this repayment by the due date may result in a ‘late payment’ fee.
The best way to avoid this fee is simply by reviewing your statements, noting the due date and ensuring you have made the repayment by this date.
If you are making repayments over the internet, be sure you meet your bank’s cut-off time for transaction processing. It typically takes one business day for a payment to be transferred from your bank account to your credit card.
Cutting the cost of lines of credit
Lines of credit are like a personal overdraft. You have a predetermined credit limit that can be redrawn at any time. While these facilities can be extremely useful, like all forms of credit they should be used wisely – and this includes keeping fees to a minimum.
Trimming exception fees
The terms and conditions of your line of credit will explain the sorts of exception fees you could be charged. The most common fees are outlined below:
Having insufficient funds in your account to meet a regular repayment can result in a ‘dishonour fee’. Checking your account balance regularly, particularly if you make a payment by cheque, or if you anticipate a direct debit payment, will help to ensure your account has adequate funds to cover the payment.
Late payment fees
Your line of credit statement will specify the amount required to be repaid each month - and when the payment is due.
Missing this repayment date may result in a ‘late payment’ fee.
The best way to avoid this fee is simply by reviewing your statements each month, noting the due date and ensuring you make this repayment on or by the due date.