How To Avoid Fees And Why It Matters - Blog Provided by Bankrate
Bank fees have been steadily on the rise, with average overdraft fees reaching a high of $33.58 in 2021. Millennials and Generation Z have faced the brunt of these increasing costs, paying more than three times as much in bank fees than older generations, according to a recent Bankrate survey. In monthly checking account fees alone, the survey showed millennials paid $16 and Gen Zers paid $19, on average, versus $4 for Gen Xers and $2 for baby boomers. The disparity caused by bank fees most significantly affects working class people and people of color.
For many millennials and Gen Zers, tracking money and investing in the right savings account may not seem like a priority, especially given that they are increasingly overwhelmed by work, student debt and the ongoing pandemic. Unfortunately, these overlapping struggles also put younger generations at the most risk of conceding to higher bank fees or being less careful with their money. The cost of high monthly checking account fees can amount to over $400 a year, money that otherwise could have gone into emergency savings or investments.
Bypassing bank fees can be highly rewarding for both short- and long-term goals. With overdraft fees at all time highs, it’s crucial to prevent your account from being overdrawn. Some steps to take for preventing an overdraft fee include:
Budgeting to be conscious of how much you’re spending
Keeping track of your available balance regularly
Opting in for alerts for when your balance is at risk of an overdraft
But perhaps the best way to curb overdraft fees is by switching to a bank that doesn’t charge them at all. Some banks, such as Capital One and Ally Bank, recently eliminated overdraft fees.
Switching to a bank with lower or no fees is especially worthwhile for younger workers to get a head start on saving. Monthly maintenance fees — which hit younger consumers hardest — in particular, are easily avoidable. Many online banks charge no monthly fees and also feature low minimum balance requirements, another key consideration for younger workers in entry-level jobs or working in the gig economy with inconsistent income. When considering a new account or bank to switch to, Bankrate’s list of best banks can help guide you towards one that suits your needs and saves you money.
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