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Is Your Bank Taking Advantage of You?

This is a guest post from Kalyn Brooke of KalynBrooke.com

Believe it or not, your bank does not always have your best interests at heart.

They are in business to make money, and to make money off your money. From interest rates to extravagant fees, not only are you beholden to the services they provide, they also make it extremely difficult to switch your accounts to a different bank when you finally decide to take the plunge and leave.

Maybe stuffing your cash under a mattress is a viable solution after all!

But in all seriousness, banks are truly a necessity for your finances, and can be very beneficial to help grow {and store} your savings, despite making you jump through hoops to get there. Here are 5 smart ways you can protect yourself right now, and take advantage of your bank, instead of letting it take advantage of you.

1. Choose a Small Local Bank

If you’re not banking with a small company, you may want to consider switching to one. Small banks generally work with you to customize their services according to your needs, rather than lump you into a corporate customer base that isn’t personal at all.

Big banks also have more rules, and are less likely to waive fees in defense of business protocol. I have personally worked as a teller for a small local bank, and we operated more on a case-by-case basis. We knew names, faces, and normal account history, and as a result, we had the authority to make better business decisions without a lot of red tape holding us back.

Just make sure the bank you switch to is FDIC insured, which means your cash is protected by the federal government against loss. Not all banks are mandated to offer this, and you definitely want your hard-earned money to be secure!

2. Negotiate Interest Rates

Despite what your banks want you to think, interest rates are negotiable. Perhaps not so much with Certificates of Deposit or Money Management Accounts, but definitely with your Personal Savings.

Stop by your local branch or write a letter saying you’re unhappy with rates on your savings account and compare them to other banks in the area. Doing so may encourage them to boost their rates a little to stay in line with their competitors, and even a half a percent is better than nothing at all.

You also have the option to open up an online savings account {my personal favorite is Capital One 360} to use for a child’s college savings, yearly vacation plans, or even to save for a home remodel. Online accounts generally have much better rates than brick-and-mortar banks, because they don’t need to operate with the same amount of staff, and can leverage their virtual presence.

On the other hand, transfers from an online savings to your personal bank account could take up to 3-5 business days to process, which might be seen as a disadvantage, or make it less tempting to spend. I guess it depends on how you want to look at it!

3. Don’t Ever Pay for a Checking Account

For every checking account that comes with a fee, there are 5 others that will actually pay you to open one up with them. This could be a great opportunity to try a new bank and see if you like them, while earning a little bit of extra cash on the side.

If you don’t decide to keep the account, most will let you close them without penalty after a 45-60 day period, but make sure you read the fine print first! Many checking accounts require that you accept e-statements, direct deposits, make a certain number of debit card transactions a month, and maintain a minimum balance before they give you the bonus.

4. Know Your Fees

Banks are notorious for their fees, and customers are notorious for not knowing exactly what they are. But can you blame us? It seems like it would be common courtesy to print off a statement, make account transfers, or use a bank ATM, without charging us so much!

But it is our due diligence to research and find out exactly what it costs to use bank services. Be a very careful consumer, and talk to your bank’s customer service representative to understand all fees associated with your account. Keep an eye on all mailings from your bank as well. This is the primary way your bank communicates with you about fee hikes, and you don’t want to be caught unaware because you thought it was junk.

5. Avoid Overdraft Protection

Overdraft protection sounds pretty good, but it’s actually not. Basically, you are allowing your bank to let you overdraw your account, and then charge you a fee for it. Without this service, they will just decline your debit card, and you won’t be able to make any purchases over and above your balance.

Sure, it can be really embarrassing to find out you don’t have enough to pay for your groceries, especially when you are already in a checkout lane with a couple of overtired kids, but it’s even worse to pay an extra $10-$30 fee just to save you the convenience of not having enough.

Maintain a careful checkbook, and a $100 buffer in your account just to be safe, which will help you avoid this cost all together.

Banks really are not as evil as I make them sound, but they can be if you aren’t fully aware of all their rules and regulations. A bank counts on your ignorance as a consumer, but you can fight back and make sure you know exactly the kind of account, and business relationship, you’re getting into before you ever sign an agreement.

And if you do decide to switch banks, take your time to read all the fine print and talk to friends who have accounts with the bank you’re considering. It certainly depends on what your financial goals are as a family when it comes to choosing a bank that’s right for you. These 5 tips will help you be smart with your decision!

Kalyn Brooke is a life management expert for busy women who crave a simpler and more organized life. Through her recognizable, down-to-earth approach, she provides a daily dose of inspiration and guidance, whether you’re looking for smart money tips, time saving routines, or anything in-between. When she’s not experimenting with ways to do even the most mundane tasks more efficiently, you can find her crafting detailed to-do lists in her bullet journal, or indulging in—yet another—personal development book. Meet Kalyn and learn how stay on top of it all at KalynBrooke.com.

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What do you appreciate or dislike about your bank? How do you make sure your bank is not taking advantage of you?

Ruth Soukup

Ruth Soukup - LIVING WELL SPENDING LESS. Practical solutions for everyday overwhelm. Food Made Simple, Life Etc., Home 101, Smart Money. Start organizing your whole life today!

View Comments

  • Actually, most banks charge an overdraft fee, and let customers overdraft their accounts without declining their cards. You will have to call customer support and request that setting, it will not automatically happen. Then, when you do overdraft your account, you will get a hefty fee. In comparison, with overdraft protection, instead of your account becoming negative, the money comes from another one of your accounts and you get a smaller fee.

  • You can also consider switching to a credit union. Since credit unions don't have stockholders (the members ARE the stockholders) their responsibility is to get you the best rates and discounts.

  • Good tips! This is partially why I just switched to Simple. It's all online, fee-free (including lots of fee-free ATMs), and their customer service is top notch. I've had a few questions, and when I sent in a question via their website, it was generally answered within an hour. Plus they have lots of cool features to help you save for stuff and track your spending.

    (No, I don't work for Simple. I just really really like it and think more people need to know about it :) )

  • We've always used a credit union--no fees, great rates, and fantastic customer service.

  • Interesting! We have found that our local credit union has been (generally) very great to work with! They offer great rates, including great promotions - I once got a 6 month CD with only $2500 in at 2.14% APY. You can't beat that anywhere!

    Plus, they are really all about the customer. I totally recommend CU to people now.

  • Great advice! And I have one more suggestion to add - check out your local credit unions! We've found them to be MUCH better than the local banks, with more incentives and dividends, and a whole lot less in the fee department!

    • Because they don't pay income taxes like banks do

  • Great list! I find number one, dealing with a local bank, incredibly important as they are much better when dealing with identity theft. Big banks have gotten pretty bad at turning a blind eye to their tellers signing you up for credit cards. While they aren't costing you money per sey, it's still affecting your credit and is literally stealing your ID.

    Also local banks are much better at helping you clean up ID theft. Some will even do the paper work for you! After seeing my dad struggle with ID theft and cleaning it up for more than a decade (collection agencies will sell dead accounts to each other). I'm all about getting help if that ever happens to me.

    • Yes, ID theft is a major issue, and I agree - smaller banks help you get through it much better than larger ones!

  • These are really great tips. I think my bank IS taking advantage of me! Thanks.

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Ruth Soukup

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