Finance

8 Ways Banks Are Taking Your Money (Without You Even Knowing It)

8 Ways Banks Are Taking Your Money (Without You Even Knowing It) #theeverygirl

Once upon a time, and not very long ago, banking was a service. It wasn’t all about the profit; it was about serving people and making lives easier. Somewhere along the line (perhaps with the repeal of the Glass–Steagall Act) banking became a full-blown business focusing on increasing profit.

And don’t get me wrong, it has always been a business that needed profit to be sustainable, but when you think about the billions of dollars banks make charging fees they shouldn’t be charging, you can understand the outrage! Which brings us to this… banking should be fee free and the sneaky ways banks charge you should be public knowledge. So call me a whistle-blower! The following are eight ways banks are taking your money without you even knowing it. 

1. Balance Transfer Fees 

When you get an offer in the mail stating you can save money on your high interest credit cards by opening up a new credit card with a lower rate than transferring your balance over, be careful! Many banks include a "balance transfer fee" and without realizing it you may be paying more over the long run for the transfer than before. 

2. Overdraft Sweep Fees

We are all familiar with the dreaded overdraft fee that charges an average of $34 for transactions—so when you don’t have enough to cover your checking account. But did you also know many banks have created an "overdraft sweep fee?" This charges you to simply transfer money from your savings account into your checking account to cover an overdraft…and this means they are charging you for moving your own money!

3. Cash Advances

When you take out a cash advance from your credit card do you think there is no extra charge? When you review your statement all you will see is the amount your withdrew, but most credit card companies disguise this fee by increasing your interest rate for cash advances. Sometimes this interest rate can even be double your regular rate for purchase! For example, you may have an interest rate of 10% every time you make a purchase, but if you decided to take out a cash advance the rate of that transaction can be 20% or higher. Yikes!

4. Foreign Transaction Fee

Another sneaky way banks will charge you is by charging foreign transaction fees—even when you are not traveling abroad. Many banks charge a fee if your transaction has originated oversees. For example, if you purchase a vintage French dress and the business is also located in France, banks may charge you a foreign transaction fee. 

5. Minimum Balance Requirements

Many banks say that they offer free checking accounts, but many of them are not absolutely free. Once you open a “free” account, the fine print starts to kick in! Usually this means if you don’t maintain a minimum amount in the account they will charge you a monthly fee.

6. Minimum Activity Requirements

In the same vein of minimum balance requirements, some banks have also added a minimum activity requirement to their free accounts. So keep in mind what the activity requirement is and make sure you stay above it to avoid unnecessary charges. 

7. Redeeming Fee

Many banks give you reward points for using your card. But some banks also charge you to redeem those points. So be careful when cashing in!

8. ATM Fees

Though we have grown accustomed to paying for our own money, maybe we shouldn't be. Many times when you use your debit card banks charge merchants a interchange fee. And that means banks charge a fee regardless of how you decide to access your money. 

The bottom line? You work hard for your money and should not have to pay unnecessary fees in order to access it. In fact, your money should be working for you—instead of you working for it! Be sure to pay attention to the fees banks are charging and do your best to avoid them! And, if it makes sense for you, maybe join a fee-free bank so you won't have to worry about extra fees at all.

Credits

Luvleen Sidhu #theeverygirl

Luvleen Sidhu

Luvleen Sidhu is the Co-Founder and Chief Strategy and Marketing Officer at BankMobile, America’s first absolutely fee-free bank aimed at helping the underbanked, millennials and middle income Americans have an affordable, effortless, and financially empowering banking experience.