Friday, February 17, 2012

9 Fees to Watch Out For

My paycheck this week coincided with the first pay period in which I was able to put money into my 401(k).  I am hugely excited about this because of my company's very generous matching policy.  Due to my excitement, I logged into the 401(k) website to make sure everything was running smoothly.  For the most part, it was, until I checked my preferences.

The site had my default settings set to me paying a fee to receive monthly/quarterly updates on my investments through the mail.  Being the frugal dude that you all have come to know and Love (capital L, things are getting serious between us, I know), I immediately switched my preferences so that I will now only receive free electronic account updates.

I really despise fees, hidden or otherwise, so, in the spirit of being helpful, I've compiled a list of nine fees that I do my best to not pay.

  1. ATM Fees - This one is one of the more obvious choices, but it bears repeating.  If you get money from an ATM that is not affiliated with your bank, you stand to pay $2-$5 for that convenience.  Additionally, your own bank may ding you with an extra fee for taking money out as well.
  2. Overdraft Fees - Again, super obvious, but if you pull money out of your checking account, whether at an ATM or by writing a check, and you don't have the funds to back it up, your bank will likely pay the money out, but it will charge you a premium for doing so (probably between $20-$30).  There are times when I've been broke, and I bought fast food under the mistaken assumption I had money in my account to pay for it.  Let me tell you, I've yet to taste a cheeseburger that's worth it's own cost plus an overdraft fee.  Six dollar burger meet Thirty-six dollar burger.
  3. Bank Statements - Just like how the company that manages my 401(k) tried to do to do to me, some banks charge you to receive paper statements.  If you can opt out of this, it's a good idea to do so (Guess what?  If you're reading these words, you have internet access!  You can therefore check your balances online!).
  4. Fees for Having a Debit or Credit Card - It caused an uproar in the personal finance community when Suze Orman released a debit card that charged a monthly fee.  Look, you should not have to pay money for the privilege of accessing your own money.  Similarly, many rewards credit cards charge an annual fee for you to be their customer.  As there are many rewards credit cards that give you cash back without an annual fee, it's usually the acme of foolishness to stick with a credit card with a fee.
  5. Talking with Customer Service - While we're singling out Suze Orman (though I know this is also a policy at some banks), it's worth noting that, while the first monthly conversation with a customer service agent is free, each additional conversation will cost you $2.
  6. Purchasing Investments - If you have an investment account, (with Sharebuilder for example), you will pay up to $9.95 each time you order stocks, bonds, ETFs, or (most) mutual funds.  While $9.95 may be cheaper than going through other investment brokers, this can be a big percentage if you're not investing very much money at a time.  In general, I suggest making it a point to not pay more than 2% in fees for each investment purchase, otherwise you'll find yourself eating to much into your profits.
  7. Dining In vs. Taking Out - Some local restaurants in San Diego charge me an extra fee if I say I'm eating there instead of taking it to go.   The nefarious thing is that these restaurants do not automatically state that there's a fee one way or the other.  I make it a point to always ask if there's a fee either way, and then stating that I'd prefer the way without the fee (who wouldn't?).  
  8. Credit vs. Debit vs. Paying Cash - Some places (particularly gas stations) will charge you different prices depending on which of these three methods of payment you're using.  I do my best to only shop at places do not discriminate on this basis.
  9. Financial Advisers - This one is a little different than the others, but hear me out.  Financial advisers generally get paid by you in one of two ways (not to mention getting paid by investment companies if they recommend their products).  The first way is by getting an upfront fee from you for the time they spend with you.  The second is by getting a percentage of whatever they encourage you to invest in.  I bring this up not to suggest that financial advisers should not get paid for their work, but instead to remind you that they are getting paid one way or the other.
I hope this list raises awareness of some of the fees that you might not realize you're paying.  I realize that in some instances, paying a fee is a matter of convenience (sometimes your closest bank ATM is 100 miles away and you need some cash right now), and that it might occasionally make more sense to pay a fee than not to.  Still, if we can be aware of the fees we might be exposed to, it'll help us all save some money in the end.

What do you think?  Are there any fees that I missed that you find absolutely deplorable?  Let me know in the comments.

Photo by paul nine-o.

This post was featured in the Yakezie Carnival of February 26, 2012.


Daisy said...

My friend told me that she had a $120 fee each month just to keep her credit card. I almost died! She said she was dinged even if she didn't carry a balance. Craziness!

Bryan said...

Wow, that is amazingly bad; I have never heard of a monthly fee that high. I have to assume she gets some pretty amazing perks for that kind of money.

Dannielle @ Odd Cents said...

Here in Barbados many banks charge a fee for transactions done with the bank teller. Some charge fees if your balance goes below a certain amount too. Wherever they can squeeze you, they will.

Bryan said...

Dannielle, I totally agree. While I acquiesce to the idea that businesses should be able to charge whatever they want, it irritates me that businesses that people need to use every day nickel and dime their customers.