Most of us hold a savings account that helps keep a portion of our income protected. The entire arrangement also helps investors grow their savings and set a budget for meeting relevant financial goals over a period of time. But concealed bank fees can wipe out any progress made and even leave you with less money than you started with every month. As you assess what the bank has to offer on your zero balance account, getting yourself familiar with the hidden charges that might reduce your savings amount will save you many efforts in no time.
Opportunity Costs
When money is deposited in a bank, there’s something known as an opportunity cost. Instead of investing money elsewhere or using it for any other purposes, it is placed in the bank account and the earnings are what the bank offers as the interest rate on savings accounts.
A savings account will allow you to gain interest, but you can be able to earn more interest without switching banks. For example, Certificates of Deposits usually pay higher rates of interest if you commit to keeping your cash unaltered for one year or more. The difference in interest rates might be small, but on larger deposits, the amounts can be significant. If you are already owing money on credit cards, automobile loans, or a home loan, you are currently paying an interest amount on those loans. In many cases, the interest rate on loans is higher than the rates that are earned in a savings account. It may seem unnecessary to preserve cash in savings, but you do have a chance to build healthier finances. If you’re saving for a goal that requires fifteen years of the repayment time period, a savings account may or may not be the best place for your money. Savings accounts are safe and undoubtedly help to grow your assets and that might just be adequate for your requirement—but inflation will eventually dissolve your savings over time.
Fees for maintenance
Some banks charge us based on the privilege of opening an account with them. While it is minimal and rare but maintenance charges deducted on savings accounts on a monthly basis reduces your balance, and it can be hectic when interest rates are less. It is easy to find banks that don’t charge monthly fees and certain online banks deduct maintenance charges rarely. Local banks and small-scale union banks tend to be convenient and do not pertain to deducting such a nature of charges. However, these fees still exist in one form or the other, so it is advisable to go through the policy structure and fee disclosures before opening an account. Maintenance fees and additional fees are problematic if multiple savings accounts are used to organise finances. Knowing the rate of deduction prior to investing in the particular banks will save some burden.
Transaction Fees
Some laws draw a limit to certain withdrawals from a savings account aligning with the bank policy. The limits usually do not cause a problem. Withdrawals at an ATM generally do not count toward that limit, although some banks deduct a minimal charge if money is withdrawn a certain number of times from an ATM booth that is not belonging to your bank. Depending upon the bank policy, a fixed number of transfers are deemed enough. But if one needs to withdraw money exceeding that limit, the respective bank may charge a fee. After excessive transactions, banks may close the account or transform it into a checking account. Consult about these transaction limits with your account manager and they may provide you with some insights to reduce transaction fees as much as possible.
Additional Fees
It is possible that you have to clear additional fees, depending on the activities happening in your account. For example, banks may deduct an amount for providing bank statements or sending substitute ATM cards/Cheque books, etc., which are fundamentally some services you hardly need unless these items are misplaced or damaged. Depositing faulty checks into your account can lead to deduction of fees when sometimes it is not your liability that the bank bounced a check. There are annual and minimum balance fees that imply that if you don’t maintain a minimum balance in your account, which was agreed upon while opening the particular, banks will deduct fees in the form of Monthly Service Fees, Consolidated Charges, etc.
While most of these charges are nominal, they tend to disrupt your budget and savings. You can also check the saving account interest rate online. Make sure you are well versed in these charges to avoid unnecessary confusions in the future.
