Estimated Monthly Savings: $81
When thinking about how to reduce expenses in their personal budget, people usually ponder things like how to cut their food budget, lower their car payment, or reduce their monthly utility bill. One expense that is often overlooked is the very thing they use to perform most of their financial transactions – their bank account. Between maintenance, ATM, overdraft, and other fees, a checking account can get expensive. Online banks have no costs for maintaining a building, hiring and managing a staff, or any of the other overhead costs that come with having a physical location. This means they don’t have to charge their customers fees to cover those costs. Here’s how moving your money to an online bank can save you up to $81 a month.
- Maintenance fees – Many brick-and-mortar banks charge a maintenance fee on checking accounts unless you keep a specified minimum balance or average daily balance in your account. That minimum amount can be anywhere from $100 to $1500 or more. If you fall below the minimum, you can be charged a monthly fee that ranges anywhere from $5 to $13, with $10 being the average. It isn’t difficult to find an online bank that doesn’t charge a maintenance fee, so you can put that $10 in your pocket.
- Transfers – If you use your checking account with a physical bank to send money to an external account or to a friend or family member, you’re likely to get hit with a fee. Do you have a separate long-term savings account at another bank that you transfer money to once a month? That could cost you $3. Need to send a wire transfer repay a friend using your phone? You can get hit again. If you do this three times a month, you’re up to $9. Many online banks have eliminated this fee.
- ATM fees – This one can add up quickly. If you’re out and need some cash but can’t find one in your bank’s network, you’re going to pay an average of $2.77. But that’s just the fee for that ATM. Your bank can hit you with another fee. That one use of an out-of-network ATM can cost you about $6. Do that a couple of times a month, and you’re out another $12 for the month. Many online banks don’t charge an ATM fee at any location. Some will even reimburse you for the fee charged by the owner of the ATM you used, removing one worry from your list and adding another $12 a month to your pocket.
- Overdraft fees – It happens to most people at some point. Despite your meticulous attention to your budget, you forgot to record a transaction or you forgot about that new monthly payment that starts this month. You end up with a negative balance in your checking account. And what does your bank do when you already don’t have any money? They charge you money. One overdraft can cost you up to $50. Many online banks help you avoid overdrafts by sending you a text when your balance is low. Some can even be set up to remind you when the due date for a particular bill is coming up.
When you’re looking for ways to cut costs, consider moving your money to an online bank. $81 a month adds up to over $972 a year. What could you do with another $972 a year?