Are you looking for ways to save money? One of the easiest ways to cut costs is to find and plug “money leaks” – ways that money seeps out of bank accounts when you are not paying attention. Here are five common money leaks:
1. Late fees are extra charges companies tack on to a bill when it is not paid by the due date. Late fees can be as much as $30. When several bills are not paid on time, late fees can cost a couple hundred dollars over and above the regular amounts due.
Late credit card payments can cause the card’s interest rates to increase dramatically. Some credit card companies will also increase your interest rate if you are late paying other bills.
To avoid late fees:
- Set appointments in your calendar to pay bills well before their due dates.
- Set up regular bills to be paid automatically, either by credit card or automatically from your bank account.
2. ATM fees occur when you use an ATM at a bank other than your own. Often there are two fees: the first from your bank and the second from the bank whose machine you are using. Although ATM fees are small, they add up if you make regular withdrawals at other banks. ATM fees cost one of my clients $15.75 a month. This is $189 a year. His own bank was a half mile away from the machine he regularly used.
To avoid ATM fees:
- Plan your cash needs ahead so you get to your bank’s ATM when you are close by.
- Switch to a bank or credit union which either does not charge ATM fees or reimburses them.
3. Bank account fees will show up on your monthly statement. Banks charge fees to cover their costs on certain services, such as wiring money and stopping payment on checks. Some fees can be avoided, however. For instance, a monthly fee is deducted when your balance falls below a designated amount. Or, a fee is assessed for paper statements.
To stop bank fees:
- Meet with a representative from your bank to learn how you can avoid these fees, or whether there is another account that better meets your needs. You can always look at other banks.
4. Overdraft fees are bank charges you incur if you “bounce” a check. Overdraft fees can be $30 or more each. A client once bounced seven checks in one month. $210 in fees leaked out of her account when she wasn’t paying attention.
Overdrafts often occur when you make debit card purchases, ATM withdrawals and automatic bill payments. These are easily forgotten. Keep in mind that many companies process checks as electronic transactions. This means the money is withdrawn from your account almost as soon as the company receives payment.
To avoid overdraft fees:
- Keep an up-to-date checkbook register. Treat every withdrawal – whether it is a check, ATM transaction, debit card purchase or electronic bill payment – as if you just handed over cash. Keep that amount of money in your account to cover the payments.
- Sign up for account alerts. These are e-mail or text messages from your bank and credit card companies with updated account information. Your bank can notify you when your account balance drops below a certain amount. To set up account alerts, log into your account, go to the customer service area, and look for “account alerts,” “manage alerts,” or similar.
5. Automatic payments are found on your bank and credit card statements. They could be services that you no longer use or donations to a charity or political cause that you no longer choose to support.
To stop automatic payments:
- Call or go online to the organization’s website to cancel the service or end the contribution. One you have cancelled such a service, check your statements each month to verify that the payment has stopped.
It is worth spending time reviewing bank and credit card statements to look for money leaks. Then you can take steps to plug those leaks. This is found cash! Use it for savings or the things on which you do want to spend money.
This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice. Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.