Types of Bank Charges

You may not be aware however, there are lots of various bank charges you might be paying regularly.

Certain of these charges can be avoided, while others are simply the result of dealing with the financial institution you choose. We’re going to look at the top commonly-used bank charges , so you are aware the next time you’ll see one on your account statement.

Different types of bank fees

There are several types of bank charges you might come across. Here’s a quick overview of of the most commonly encountered charges:

1. Maintenance Fees: A lot of banks will charge a monthly maintenance fee for just opening an account. The fee typically ranges from 10-15 dollars.

2. ATM fees: In the event that you utilize an ATM that isn’t associated with the bank you are using, you will most likely pay a charge of $2-3.

3. Overdraft Fees: If do not have enough cash on your bank account in order to pay for the cost of a transaction, your bank could be able to charge you an overdraft cost of at least $30.

4. Wire Transfer Costs: If you have to transfer or receive money by wire transfer your bank is likely to be charged a fee of $20 or more.

5. International Transaction Charges When you utilize your credit or debit card to purchase in a currency other than the one you are using your bank might be required to charge a foreign transfer charge of 3percent or more.

Be aware that these are only a few of the most frequent bank fees , but there are many more that you might encounter. Make sure to inquire with your bank to find out the fees they charge to be able to

Why do banks charge fees?

We are all aware that banks earn money by charging fees to their services. But have you ever considered the reason why they charge fees at all? In this blog we’ll look at the most popular reasons why bank charge fee.

1. In order to cover the costs for running their businesses – Similar to any other type of firm, banks face expenses that they have to pay in order to continue in operating. These costs can be anything like utilities, rent employees’ salaries, and much more. To cover these expenses, banks depend on the fees of their customers.

2. To earn a profit Of course, banks require profits to remain in business. They accomplish that by charging charges for their service that are more than their actual expenses. It allows them to make profits and then invest the profits back into their businesses.

3. To reduce the risks of lending money If a bank loans money to a client there is always a chance that the borrower won’t be able to repay the loan. To mitigate this risk, lenders charge interest for loans. So even if the borrower does not repay the loan, the bank still makes profits from interest costs.

4. To deter customers from using certain services . In some instances banks might charge fees to deter users from using specific services. For instance, they might charge an amount for cash withdrawals at an ATM to motivate customers to use debit card instead.

5. In order to comply with regulations of the government Certain government regulations make banks charge fees for specific services. For instance there is the Dodd-Frank Wall Street Reform and Consumer Protection Act requires various charges on banks, for example, those imposed by the Durbin Amendment which caps the fees banks are allowed to charge for debit card transactions.

6. In order to pass on the costs of technology advancements – as new technologies are developed banks might have to update their systems to keep pace. It can be expensive which is why they could pass some of the cost onto their customers through charges.

7. To recover losses from bad investments. Occasionally banks make bad investments and are unable to recover their losses due to. In order to make up these losses, they could increase fees or interest rates on their services and products.

Also, Raed: A guide on the interest rates of every bank

How to stay clear of Bank charges

There are several ways to ensure that you do not get taken advantage of from your financial institution. One is to ensure that your account remains in good standing by having enough funds to pay any fees which may be assessed.

It is also possible to talk to your bank about how you can reduce or eliminate fees. You can also change banks that doesn’t charge the same charges.

What should you do if you’ve been accused of a charge

If you’ve had to pay an amount from your financial institution, there are couple of things you can do. You can first try to talk to your bank about the issue.

They might be willing to waive the charge when you have a great background with them and provide a reason for why this fee is creating financial strain. Then, you can transfer to a bank that doesn’t have fees.

It may take some investigation for you, yet it will make you cash in the end. You can also use this to examine your habits of spending and consider what you can do to cut costs in order to avoid charges later on.

Conclusion

There are numerous kinds of bank charges, and it’s crucial to be aware of what they are prior to when you begin using the services of a bank. Some of the most popular charges include monthly service fees, ATM fees, overdraft charges, and foreign transaction charges.

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