Skip to main content

Is Your Bank Overcharging You?

By U.S. News & World Report

Overdraft charges, out-of-network ATM fees and other fees are big business for American banks, to the tune of $42.3 billion for the year ending on June 30, 2015, according to analysis from Moebs Services, which collects and analyzes data on financial institutions. Fees have only gotten pricier in 2016. The average out-of-network ATM fee rose from $4.35 last year to a record high of $4.57, according to a survey conducted by Bankrate.com. That’s like paying an 11.4 percent tax on a $40 ATM withdrawal, but instead of your money going to fund schools, roads and police, that tax fattens the bottom lines of some of the nation’s richest corporations.

[See: 8 Personal Finance Myths Money Experts Want to See Disappear.]

If you’d like to keep more of your money in your wallet — and not in your banker’s wallet — get informed about your bank’s fees and policies, and get proactive about your banking habits and practices.

1. Examine bank statements. Balancing the checkbook by hand is a thing of the past. These days, more and more of us use our bank’s online or mobile bill paying and account management tools. That convenience, however, comes with a price. It’s easy to let our money run on autopilot and skip the close examination necessary to catch fees and service charges. Over time, ATM fees, account service fees and all the rest can add up to hundreds, even thousands of dollars. A few moments spent browsing your transactions online can alert you to fees and charges you weren’t aware of — or didn’t know you agreed to.

2. Compare banks and services. It isn’t unusual to become comfortable with the banks and financial institutions we are familiar with. To avoid the potential of being overcharged for basic services, compare rates at competing banks and credit unions at least annually. If you discover that your bank is overcharging you or that certain features cost more than they do elsewhere, contact your bank and ask for those fees to be reduced or eliminated. Be prepared to change banks if customer service is not cooperative. Fortunately, most banks would rather keep you than see you leave and should be willing to work with you.

[See: 10 Foolproof Ways to Reach Your Money Goals.]

3. Pay attention to overdrafts. Because overdrafts can be embarrassing and frustrating, consumers often choose to “opt in” to their bank’s overdraft protection service — and thereby agree to pay any associated fees. While overdraft protection may seem like a friendly service offered by the bank, it’s also a money-maker. The Consumer Financial Protection Bureau has found that majority of debit card overdraft fees are incurred on transactions of $24 or less and that the majority of them are repaid within three days. Given that the median overdraft fee is $34, this amounts to a three-day loan of $24 with an APR of 17,000 percent. Fortunately, consumers can avoid this by paying attention to account balances and by deciding not to opt in to the overdraft protection service in the first place. In that case, if you do overdraw an account, the bank will refuse the transaction. Embarrassing, maybe, but not as embarrassing as paying 17,000 percent interest on a three-day loan.

4. Check credit reports. The recent revelations that employees of Wells Fargo Bank opened millions of unauthorized deposit accounts in customers’ names and then transferred funds into those accounts from customers’ real accounts, triggering overdraft and other fees is a shocking reminder of how important it is to check credit reports regularly. While this particular scam is unlikely to occur again, others certainly will. A regular review of your credit reports may help you uncover banking or other accounts that you did not sign up for or agree to — and which may be costing you money.

[See: 9 Financial Tools You Should Be Using.]

5. Ask questions. Finally, if you find any fees or service charges on your statements, credit reports or other documents that you didn’t approve, contact a bank representative for an explanation. Often, we see a small fee or surcharge and think nothing of it. Resist the temptation to be complacent. Over time fees and charges add up. By contacting the bank, you’ve taken the first step toward re-negotiating those fees — or alerting them that you are onto their scam.

More from U.S. News

10 Money Leaks to Shut Down Now

10 Ways Companies Annoy Customers

10 Things Everyone Should Know About Money

Is Your Bank Overcharging You? originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
Read Next Story

Related News

Frustration grows in Venezuela as earthquake death toll reaches 1,430

Israel and Lebanon sign framework agreement with US in ‘first step’ toward peace, Rubio says

Trump-endorsed populist poised to become Colombia’s next president as rival challenges vote