All banks charge at least some fees for certain things, and it’s important that you know how to stay one step ahead. These fees can quickly become very overwhelming and costly, which is all the more reason to learn how to avoid them. This information could save you hundreds or even thousands of pounds over the years. One of the biggest financial mistakes a person can make is underestimating bank fees.
The last thing you want to do is to end up paying a regular fee just to keep your bank account open. A lot of financial institutions in the UK charges accountholders a fee once a month or year, and they can really start to add up after a while.
When you are looking for a new bank to open an account with, you should always read the fine print. Some of these deals will require you to maintain a balance of anywhere from £500 to £1500 at any given time. If you don’t plan on keeping at least that much money in your account at all times, you should look for a different option.
There are certain other ways in which banks can penalize accountholders, and it is important to know what they are. The money in your account may not accrue any interest while your account doesn’t have the minimum required balance in it.
If you don’t think that you will be able to make the minimum payments, you should contact your bank immediately to see if they can work with you in any way.
Some banks provide their members with buffers that can help them avoid getting hit with a fine if they make a small mistake. This buffer is usually only for a small amount, like £10 or £20. When you go beyond this amount, you will have to pay any fines you are on the hook for.
There are also accounts that offer larger buffers that are up to a few hundred pounds. If you are interested in fee-free buffers, make sure that you get one that makes sense. A tiny buffer will most likely not help you out very much in the end.
A vast majority of financial institutions in the UK will charge you interest for overdrafting on your account. The first type of rate is agreed upon by both parties ahead of time, and the other kind is associated with borrowing. Unauthorized overdrafts come with an interest rate that has not already been agreed upon.
Authorized overdraft interest rates are usually anywhere from 15-20 percent. Unauthorized rates can be as high as 30%. Certain banks will charge you a flat fee for every day your account is overdrawn. This amount is typically the same for both authorized and unauthorized amounts. You will still want to look carefully at the terms to make sure though.
A lot of people think that flat fees are a good thing because they don’t change, but it can be cheaper to opt for an account that charges interest. It is important that you consider these fees before deciding to open a certain account at a bank or credit union.
There is a fee charged whenever you make a payment despite having insufficient funds. The transaction will go through, but you will have to pay a fee. You could end up paying as much as £12 every single time. You can get an account that will not process transactions if there are insufficient funds, which will help you to avoid these fees completely. You might have to spend some time looking around, but it is well worth it.
Using your credit or debit card abroad can be very costly, so you will need to keep this in mind. It is always a good idea to get your foreign currency before you leave for whichever country you plan to visit. While not every single bank charges for purchases made in other countries, many of them do. Before you leave to go abroad, this is something you will need to find out from your bank.
Other Fees to Look Out for
There are some other fees that you should be aware of when selecting a bank or credit union. Sometimes you can opt for a faster payment service for a same day transfer, though you’ll end up spending £25-£30 extra. This is a completely optional fee, but it can be worth it depending on your circumstances. If you want to send money overseas, you are looking at a fee of anywhere from £15-£30 per transaction. The more aware you are of these fees, the more money you can save. In the end you will be glad you got this information because of how valuable it is.