In an ideal world, you would be exempt from all bank fees simply for maintaining a balance in your checking account. In reality, even the most responsible customer can incur costly fees at the bank.
Although most fees are a result of a consumer's limited understanding and lack of attention to detail, in some cases, they may be a result of something completely out of your control. In fact, most complaints filed against banks regard fees deemed unfair by customers -- as many fees are marked up exponentially and don't reflect the true cost of providing a certain service.
Here's a list of bank fees that are both unfair and costly. Keep these fees in mind to avoid being a victim of unfair charges.
1. Stop Payment Fee
Whether you want to place a hold on a payment or stop an erroneous check, a stop payment order is a quick and effective method to prevent a payment from processing -- but it comes at a cost.
The average stop payment fee is $32.40 at the 10 biggest banks in America, according to a MyBankTracker.com July analysis. The highest fee was $36 at SunTrust Bank, while the lowest was $25 at Chase.
This high fee may be worth it if a stop payment is necessary, but it will generally expire after a six-month period. Many banking customers fail to realize this, and the stopped payment goes through. To prevent this from happening, a customer must actively renew the stop payment request before the expiration period, which will incur an additional fee.
2. Overdraft Fee
When your account balance is low, the last thing you need are extra fees, which is exactly what can happen.
Another July analysis of the 10 largest banks found the average overdraft fee charged for each transaction that resulted in a negative account balance was $35.20. Overdraft fees are one of the most expensive bank fees, but this isn't the only reason why they're a sore spot for many banking consumers.
For one, you will be assessed an overdraft fee for dropping even a couple cents below your balance, which means you'll have to pay roughly $36 for being short 2 cents.
There's also a gray area with overdraft fees that often confuses customers. Even if you deposit a check right before you overdraft, this will not guarantee that you won't be hit with an overdraft fee, thanks to a fund availability policy in the U.S.
If you don't realize you have a negative balance, you may continue spending money, which could result in multiple overdraft fees on a given day. All these extra fees may make it difficult to bring your account back to a positive. Sometimes, a bank will give you a limited amount of time following the initial overdraft to pay for the charges. If not, you will be charged an extended overdraft fee for keeping your account overdrawn for an extended period.
3. Deposit Item Returned Fee
When someone writes you a check, and that person doesn't have sufficient funds in his or her account, the check will bounce. Although this is not your fault, you will have to pay for this mistake (along with the person who issued you the check). You will be charged the deposit item returned fee, which is currently an average of $12.85.
4. Debit card replacement fee
It's bad enough you lost your debit card or someone ran off your information, but what's worse is that you may have to pay for your replacement card, especially if you want it rush delivered.
Thankfully, the average cost of getting a lost debit card replaced is only $1.75, and most banks offer this service for free when delivered through standard mail. Banks also won't charge you a fee if your card was stolen.
However, the delivery time of the replacement cards can vary greatly and take anywhere between three to 15 business days. Depending on your needs, this time frame may not be an option for you. If you needed to use expedited delivery, it can cost upward of $30.
The Silver Lining
Even the most unfair fee policies today are tamer versions of fees in the past -- when there was no limit on the amount you could be charged in a day for overdraft fees. To control these unfair practices and protect bank customers from inflated charges, federal regulators are continuing to implement new rules until both bank and customer can find a happy balance.
Theresa Kim is a research analyst and writer for MyBankTracker.com, where she covers banking and personal finance.
10 Financial Land Mines That Can Decimate Your Net Worth
4 Unfair Bank Fees That Will Drain Your Account
Managed to get that raise or promotion? Fantastic -- now don't go out there and spend it all immediately. In classic "keeping up with the Joneses" fashion, too many of us see an increase in salary or a sudden windfall (like an inheritance) as an excuse to take our lifestyle up a notch. We buy bigger houses than we need, get the latest gadgets even though ours work just fine,and spring for fancy steak dinners just because we can.
Instead, whenever your financial situation gets a boost, consider the best ways to put that money to work for you. The truly wealthy are those whose money continues to grow and earn them more, even when they're not actively doing anything with it.
The average American household that carries credit card debt holds a balance of around $15,000. If you're among those who have a credit card balance, you've probably seen the little chart on your monthly statement telling you how much you'll pay in interest over the next several years if you make only the minimum payment. (If you haven't, look at it.) The same chart will also compare that to a "suggested" payment that's slightly higher.
Our recommendation? Throw everything you can at paying your balances off as fast as possible. And make sure not to take on any additional debt in the future; if you can't pay for a consumer good out of pocket, don't finance it.
We don't demonize student loan debt the way we do credit card debt because we see an education as an investment -- and higher education often is the difference between one income bracket and another. Similarly, many people justify taking out a car loan by stating that they need a car to get to work.
That said, debt is still debt, and the longer you take to pay it off, the more interest you'll pay. Once you've freed yourself of credit card debt, paying down your car and student loan balances should be next on your list.
Whether it's to handle an unexpected car repair, a sudden illness or a major plumbing problem, you should always have some money set aside to cover unforeseen expenses. Set up a regular monthly transfer from your checking to your savings account to earmark this money before you're tempted to touch it. If necessary, cut back in another budget category (like eating out or entertainment) to free up the funds to save more.
Putting aside a little each month could prevent you from getting socked with a hefty bill you can't afford and then need to finance.
No matter your age, you should be adding to your retirement funds -- such as your 401(k) or individual retirement account -- each month. Just setting aside money sporadically won't cut it; you need to identify how much you'll need to live on once you stop working and monitor whether you're on track to reach that amount.
Here's a quick-and-dirty rule of thumb: multiply your annual spending by 25. This is the amount you'll need in your retirement portfolio, if you assume that you'll withdraw 4 percent per year to live on during your retirement. In other words, you'd need $1 million in your portfolio to live on $40,000 annually. Creating a plan will help you make sure you're able to retire the way you envision.
A home is a big investment, and sometimes that investment doesn't wind up netting you the return you thought it would.
The biggest culprit is having too large a balance on your mortgage, which detracts from your own personal stake in the current market value for your home. The sooner you pay this amount down, the better your home equity will be.
You also want to be careful when purchasing a new home. Buying in a neighborhood that's on the downward spiral or buying the most expensive home on the block, likely won't net you a good return when it's time to sell. Also take care to stay away from custom renovations (like turning the garage into a recreation room), which could negatively affect your resale value.
Paying high investment fees eats away at your gains. And since your gains compound over time, this creates a domino effect that can really chip away at your wealth. Take a close look at your investment companies' fees and shop around to make sure they're not taking more of your money than they need to be.
If you don't have a long-term investment vision and are simply playing the market, you could seriously undermine your wealth-building potential. Stop paying attention to market fluctuations, media pundits and the stories of your friends and family. Instead, create your own long-term investment strategy that will maximize your overall returns. Resist the urge it play it ultra-conservative (or fall for get-rich-quick schemes) and educate yourself on the best way to make your dollars work for you.
If you're having trouble making sense of your options or want a second opinion, seek the help of a trusted financial adviser.
Based on your experience and seniority level, education and industry, you should have a fairly good idea how much you ought to be making at your job. If you don't, check out a site like PayScale to get a ballpark figure.
If you're not making what you're worth, you're doing more than leaving money on the table; you're also losing all the compound growth and investment returns that money could be generating for you. Invest in yourself with professional development and continuing education, make the case for that raise or promotion, or seek out a company who will value you higher.
If you don't have proper insurance coverage, you're taking a very big risk that could come back to bite you. Too many people think the worst can't happen to them, but the hard truth is you can't predict the future, and scrimping on sufficient insurance is never a good idea.
Of all the things we're hesitate to part with our money for, adequate insurance coverage should not be one of them. No matter your age, everyone should be properly covered with:
Homeowner's or renter's insurance.
Flood insurance (if you live in a flood-prone area).
Umbrella liability insurance (especially if you own a small business).
If a spouse or children relies on you for support, make sure you have a decent term life insurance policy, as well.