Avoiding bank fees

A Senate investigationdiscovered recently that banks are using fees and penalties to takeadvantageof their lowest-earning account holders' lack of awareness of theirrelativelyarcane rules. Consumer groups are pressuring the Government, andofficials are preparing to take action to regulate the banks.

However, regulators moveslowly. Until the needed changes take place in Australia's laws (ifthey take place), here is what you can do to avoid being penalised by your bank.

First, when you open a newbank account, try to find a fee-free account. Banks have subtledifferencesamong them, and basic accounts that don't charge fees--or that chargefew fees--do exist. The same goes for your credit cards. The best credit cardcharges the fewest fees.

When you sign up for a bankaccount, try to understand beforehand under what conditions youraccount willbe charged fees or penalties. How many times are you allowed to useyour debit card every month? What about your credit card?

Second, check if your bankoffers fee reductions or discounts, and, if so, under whatcircumstances. Manyfinancial institutions provide special low- or no-fee accounts toyouth, seniorcitizens, and people who reside far from major urban areas. If you'vebeen withyour bank over a certain period of time, or if you've ever taken outmajorloans from your bank (e.g. to buy a house), you might qualify foradditional discounts.

Third, check your bank balanceoften. Try to keep the money in your account above a certain point tobe surethat the total balance never dips below zero, even accidentally (ithappens). This is a good way to cut down on overdraft fees.

Checking your bank balanceregularly is much easier than it used to be twenty years ago, thanks totheadvent of on-line banking. Many banks offer this convenience for free;takeadvantage of it. If you sign up for on-line banking, you'll be able togetup-to-date information about your bank balance whenever you sign on totheInternet. You will no longer have to find an ATM to see how much moneyis in your account, or even leave your home.

Finally, to save money, don'tuse any ATM that isn't associated with your bank. Almost any ATM otherthanthose which are associated with your bank will charge you a fee between$1.00and $2.00 when you withdraw money with your debit card. While it isfine to usethe local corner ATM in an emergency, even if it isn't associated withyourbank, those extra fees do add up. If you find yourself withdrawingmoney fromyour account often, consider signing up with a bank that has plenty oflocal ATMs.

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