How To Avoid Bank Fees and Earn Interests with Your Bank Accounts

It is no secret that a big portion of banks’ profit comes from fees. With the changes of the economic climate, banks are working hard to find ways to generate more profits from fees. We must be very careful and be mindful when opening bank accounts. Fortunately, better deals or offers will always exist under the free market and competition environment. Here is how to bank without paying a fee and make most of your money.

Online only bank accounts – many people are intimidated to conduct banking business online. However, the online bank accounts are as safe as your brick and mortar bank accounts. They are insured by the FDIC just like others. These online only accounts offer the most generous interest rates (usually four to six times more than the average rate) and with no minimum balance. They also offer more online services like free bill pay, free bank to bank transfer and etc. I personally use ING Direct and HSBC Direct (now is called HSBC Advance).

Bank local – local small banks usually offer better banking deal then the bid national banks to compete. Check out your local banks to find the best offers. If you have the online only bank accounts, you will generally need to have bank accounts with local banks to complement. You will need it to deposit checks and get personal banking services, like wiring money. The combination of local and online banks will provide you the best service and best interest rate and lowest fees for your banking needs.

Selecting Bank Accounts – Be sure to review the fee schedule and the find prints. No fee is always better then low fees. No minimum balance is also always better low minimum balance. Earning some interest is always better then no interest rate.

Link all the bank accounts – Some “no fee” bank accounts charge bank to bank transfer when you transfer money from them. If your account is one of these, you can always initiate the link and transfer from the bank does not charge a fee. Online bank accounts usually do not have such a fee.

Park your money in the account earns the highest interest – since all your bank accounts have no/low balance requirement, you can deposit most of your money to the one earns the most. You can easily transfer your money among your accounts when needed.

Maintain a $500 cushion or get a credit line to a designated payment account – Banks generate most of the fees from bounced checks, over draft and etc. This should be a checking account because you are limited to six withdrawals for your savings accounts per statement period by law. If you can maintain a cushion like $500 or get a credit line for at least the same amount, you can generally avoid all these charges. Then you can pay all your bills from this account.