Are bank charges causing you to have sleepless nights? Are you wondering why you must pay every time you perform a transaction? Seeing your bank charges add up to substantial sums can be irritating and annoying. The bank might provide poor service, or worse still refuse to support you. “And I still have to pay bank charges?” might be the question on your mind.
So can we totally eliminate these charges? No. Banks provide financial services to the public. They are expected to charge customers and make a profit in return. Bank charges therefore represents compensation for services rendered. Alas without it no bank would be able to survive, let alone thrive.
Bank charges may differ from country to country. There are certain climes where the government collects stamp duty, a type of tax on banking transactions in addition. Bank charges, like death and taxes have now become a fact of life. You can hardly fight or refuse to pay them. Banks take the money out of your account monthly. In fact, the more transactions you undertake the greater your bank charges.
While bank charges are here to stay certain steps can be taken to reduce them to the barest minimum. You need to do the following:
Acquaint thyself with your current exposure to bank charges
Come to terms with your bank charges by making a detailed study of your statement. Request your statement from the bank and check, on a line by line basis transactions done in the month. Also check what your total charges amount to. You could be in for a rude awakening. I recently did, and it wasn’t a pleasant experience. I didn’t have a clue that I was spending so much on charges. You can only make changes when you understand the magnitude of the problem. Determine to reduce them
Acquaint thyself with the number of transactions you initiate regularly
How many bank transactions do you make in a day? Did you know that each time you use the ATM, POS machines, mobile and internet banking is one banking transaction? Each usage may have fees attached. Electronic deposits into your account also attract charges. Scan your bank statement to identify why so many transactions. Try to understand the reason behind each transaction to see if it could be stopped in subsequent periods.
Paying recurring bills in cash
It’s advisable to keep some loose cash to pay smaller and regular bills. At the beginning of the week withdraw certain amounts to cover all your recurring expenses. Petrol, Transport, Lunch, Telephone etc should be planned for. This will cause you to avoid whipping out your card to pay for these items thus causing your bank charges to skyrocket.
Leave plastic cards at home whenever possible.
Carrying your plastic cards everywhere you go is not a good idea. You should leave them at home from time to time. Planning what you want to spend on in advance can help minimise spending. You could then carry only the money for your planned spending on you. Try to make it a little bit harder to access your money wherever you go.
Earmark several days as “no spending days”
Plan and mark several days in your calendar as days where you won’t be spending any money. Start out with marking one day a week which could grow to several days a week. No spending amounts to no charges. So challenge yourself not to spend. You’re not going to die if you don’t spend I can assure. Having no spend days will help you manage your money better.
Seek and use accounts with lower bank charges
Currently there is a wide variety of bank account products. In the past it used to be only current and savings accounts. There are accounts for small and big businesses, children, students, retired people, high net worth individuals and so on. In addition there are accounts for investments, fixed deposits, mutual funds etc. Please research and weigh the pros and cons before you sign up for any account. Be constantly on the lookout for accounts with lower fees that best matches your requirements such as lower bank charges.
Use debt wisely
Be careful when you use debt. Especially when it is not for purposes that will bring more money into your pocket. For instance when you use your credit card to pay for items. If you don’t pay back within the time limit the bank will charge interest on the debt plus several fees for using the card. The same occurs when you have a loan facility. Interest rates and bank charges usually change in favor of the lender, not the lendee. Taking on debt usually causes your bank charges to increase significantly.
Trim down the number of accounts you have
The more accounts you operate/keep the more bank charges you pay out, pure and simple. Most people keep plenty of accounts. Some might have even gone dormant. I’m sure when you calculate your total bank charges in one year you might realise the level of wastage you have been exposed to. It’s time to streamline the number of accounts you have. There are several debates on how many accounts someone should have. I urge you to be mindful and not duplicate similar accounts unnecessarily.
Permit me to re-emphasize that immediately after reading this you should get all your account statements. Work out how much you have been paying as bank charges in the last 1 year. Take time to implement all 8 key points listed above to reduce fees paid going forward. This is guaranteed to save you thousands yearly. Now who wouldn’t be happy with that?