Bank service charges

Bank service charges vary widely from different account types and the way you use them. They also vary from bank to bank.

the Bank or Credit Union will require that you maintain a minimum amount in your account.

They do not charge any service fee.

This amount is very variable

and depends on the policies of the institution.

Checking account.

If your account is a checking account, you may be allowed a fixed number of free transaction, whether debit card payments or checks. After you have reach the maximum number of transaction in a month, you can be charged service fees.

If your balance is higher, you may be allowed a larger number of transactions in a month.

Banks and Credit Unions do not usually pay interest on these accounts. You do not pay service charges on your checking account. That is what you think! You are paying anyway.

Why? Because the minimum that you maintain at the Bank is loaned by the institution and they make money on that loan.

You loose interest, so you pay charges right?

You pay anyway.

Sometimes, when people talk about their finance, the subject of bank service charges is discussed. Some people think it is unjust that they pay service charges and that another person does not.

They have great difficulty understanding that persons that do not have service charges on their bank statement pay charges in another way. They loose interest on the minimum amount maintained in their account.

The higher the balance, the more they pay charges.

What to do?

The best way to deal with service fees is to open a saving account besides the checking one. Maintain the minimum amount required for your checking account and profit from reduced service charges.

Feed your saving account with surplus money and get interest on it.

You will have the best of both worlds.

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