27% of checking account holders are paying fees. How to avoid them

Despite having a free checking service, more than a quarter of checking account holders – 27% – pay a monthly fee.

For customers who don’t take advantage of free checking, those fees add up to $24 a month, or $288 a year, according to a new study from Bankrate.com. The personal finance website conducted an online survey from December 7-12 and found 3,657 adults, of which 3,069 have a checking account.

The charges come from standard service or ATM and transaction fees, the research said. The average overdraft is $29.80, Bankrate research shows, while the average overdraft is $26.58.

The annual amount may not seem like much, says Bankrate.com analyst Sarah Foster, but it can add up to more than $5,000 if you stick with your checking account for 17 years, like you do. the average customer.

Nixing bank payments are an easy way to free up a little more money in your budget, especially in the midst of inflation and the expectation of a recession. Paying these extra fees can strain consumers’ budgets and make them more vulnerable in the event of a recession.

“It’s an important and very easy way to make sure you’re not spending more than you need to,” says Foster.

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Which generation spends the most on checking fees

Young people are the most likely to pay fees, according to a study by Bankrate.com.

Gen Z, who are between the ages of 18 and 26, are at the top of the list, with 46% of checking account holders in this generation paying a fee – month. That group pays $25 a month, Bankrate.com found.

Millennials, who are 27 to 42 years old, come in next, with 42% of account holders paying monthly checking fees, Bankrate.com found. They tend to pay the most compared to other generations, at $28 per month, the study said.

Older cohorts – Gen Xers, who are between 43 and 58 years old, and baby boomers, 59 to 77 years old – are less likely to pay account sharing fees.. That includes 22% of Gen X and 14% of baby boomer checking account holders, who pay $17 and $22 a month, respectively.

More than half of Gen Z – 56% – and millennials – 52% – account holders say they sacrifice preparing for the recession over their monthly fees. In comparison, 46% of Gen X and 35% of baby boomers said the same.

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Monthly fees repay customers for purposes including paying off debt, saving for emergencies or major goals such as buying a home or car or paying for college, or saving for ‘the pension, said the study.

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Wait for the actual balance of your checking account

To know what you’re actually paying on your checking account, you should review your statement at least monthly, according to Bruce McClary, senior vice president of the National Foundation for Credit Counseling.

Start with the basics — check your transactions to make sure they’re accurate, he says. Then assess your transactions and withdrawals and the account handling fees that come up.

If you feel you’ve been charged in error, that should lead to a conversation with your bank, McClary says.

Keep in mind that there may be adjustments your bank or credit union wants you to make. If you let your financial institution know about your particular situation, they may be willing to waive some of the fees, especially the initial charge, Foster says.

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“There’s no guarantee it’ll work, but it never hurts to reach out,” Foster said.

‘Shop for Freedom’

Also evaluate if there are fees you can avoid, such as canceling out-of-network ATM withdrawals or maintaining minimum balances.

Wherever you can, try to find free savings and verification services, McClary says.

“Shop at the right time,” says McClary. “If your bank or credit union doesn’t offer them, it might be an opportunity to move your business somewhere else that might be cheaper.”

Opening a new account at another financial institution can be difficult, especially if it requires a visit to the office and physically moving money, Foster said. But the savings over time can outweigh the inconvenience.

“While switching banks can be a frustrating process, it can help you build wealth in the long term if it means you’re not paying for services you can get for free elsewhere,” says Foster.

And if you find you’re not happy with your new account, you can always move your money elsewhere, he said.

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