Know the Facts About Banking Fees: Are You Reading the Fine Print?

Banks are required under federal law to disclose the terms and conditions relative to any loan or banking account. However, these terms and conditions, which also includes important information about banking fees, are usually detailed in a separate document which typically contains a wealth of legal information and is presented in very small type. The banking fees, usually located under the heading "Fees and Charges", is often lost amidst all this copy, and is often disregarded.

It is your responsibility to ask questions regarding banking fees and to read all the documents related to your account, so that you can be fully informed as to the limitations of your account and any penalties, fees and charges you may face in certain conditions. Regardless of whether you do this or not, you have signed an agreement with the bank, and you will be liable to pay any fees or charges.

Ignorance of Banking Fees Will Cost You

Most reputable banks will allow you to take home the documents and read them before you sign an agreement. Take advantage of this and do so. This also allows you the opportunity to check with other banks to see if you can find a better deal. For example, credit unions offer lower fees than banks. If you feel pressured to sign, or a bank won't let you take the documents home, then you might want to reconsider doing business with that particular institution.

As a business owner, you might be seeking to open a line of credit with a bank. You should be aware that you may be charged a number of fees right off the bat, including an appraisal fee, a documentation fee, and additional miscellaneous fees depending upon any number of circumstances. There may also be annual fees, or fees for closing the account. The bank might not tell you any of this up front, but it is all in the documentation.

Most financial institutions rely upon these charges and fees (as well as ATM fees, merchant fees, and other financial products and services) as a significant portion of their profits. It does not matter how polite, professional, and trustworthy the representatives at any financial institution may seem. The bottom line is that they are a business, and their goal is to make money. So it is your best interest to be aware of all the terms and conditions related to any business you seek to do with a bank or other financial institution.

It's very easy to blame the banks for many of our financial woes, but in many cases, we have no one to blame but ourselves. As a whole, we don't often take the time to properly educate ourselves regarding many types of business transactions. From deceptive investment practices such as Ponzi schemes, to unaffordable mortgages, to not bothering to read the fine print about banking fees, many financial troubles could have been avoided if only we had utilized some common sense.

Is a No-Fee Account a Good Idea?

To answer this, you need to do the math. You may have secured an account that charges no fees, but usually something else is required, such as keeping a minimum balance in the account, which bears little or no interest. This money might be serving you better in a CD or other higher interest-bearing account.

Online Banking Transactions May Subject You to More Banking Fees

There is no doubting that online banking has facilitated the way we do business, but are you aware that engaging in certain online banking transactions can subject you to even more banking fees?

For example, suppose you have more than one bank account, in which you occasionally transfer money between accounts. Some banks limit the amount of online transfers you can make per month (in addition to other types of transactions), and then charge you a penalty fee if you go over that limit.

If you do not check your balance often, you may be surprised to find that you have incurred a penalty charge for each and every transfer over the maximum limit per month. Additionally, this may result in your account having insufficient funds for other transactions, which of course results in insufficient fund penalty charges.

Credit Card Transaction Fees

Credit card transaction fees for business vary according to both the card issuer and the merchant account provider you have chosen. It is important that you understand how these fees will affect your profit margin.

You will be charged a percentage rate of the sale in each and every transaction: typically 1-5% depending upon the processor, but possibly as much as 15% by some third party merchant processors typically utilized by small business that at a higher risk for merchant accounts. There may also be a flat transaction fee charged for each sale, usually from .25-.50 cents per transaction.

As with banks, merchant account providers may also ask for additional fees, such as setup fees, monthly fees, minimum monthly transaction requirements, penalties and other deductions. Your credit score will also determine the percentage taken by the merchant processor, so it is important to research several different merchant processors to find an acceptable deal.

You should also be aware that different credit card issuers will charge a different percentage rate. Many small businesses choose not to accept American Express or Discover, since these issuers charge a higher rate than Visa or Mastercard.

Additional Banking Fees to Be Aware Of

Many business owners are often surprised at the myriad charges incurred for simple transactions, whether online or conducted at the bank. But you must always remember - the banks are there to make money, and there is no shortage of ways they will try to do so. You might be surprised to find that on some accounts with some banks, you might be charged $1 for checking your balance at the ATM, and a few dollars for seeking information from a bank teller over the phone. Such banking fees are rare nowadays, but if you read the fine print, you'll be aware of them and likely save yourself a lot of money in the long run.

Banks wont admit it, but they depend upon you not to read the fine print. They don't really want you to be aware of all the banking fees. And when you are incurred a penalty fee or banking fee that seems wrong or unfair, they want you to feel ashamed enough at your inability to manage your money properly that you won't complain about the fees.

Save Money by Avoiding Some Banking Fees

There are also many other ways to save money on banking fees. These amounts may be rather small, but can add up to big numbers, and are especially beneficial to small businesses. For starters, you can certainly save money by utilizing Internet banking, but once again, be aware of any banking fees or charges you might incur as a result. Also, try to find a bank that does not charge you a monthly fee for using basic online banking services.

You can also save money by using discount check printing service, rather than having the bank print your checks. You can save yourself an average of $20 per 200 checks.

Of course, the best way to save yourself money on banking fees is to shop around, do your research, and pick the bank that works best for you and your business. Be sure to check your financials often to see if you're being charged any banking fees you might not have been aware of, and make the necessary changes to avoid those fees in the future, if possible.

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