How to Combat Bank Fees to Save Yourself Money

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.

Hidden 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.

Buffers

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.

Interest Charges

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.

Bounced Cheques

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.

International Transactions

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.

How to get a Mortgage with a Student Loan

Many graduates will find that within a few years or perhaps a decade of leaving university they will be thinking about getting a mortgage. However, most will not have repaid their student loan and so they will have this debt to consider when they are applying for a mortgage. They may worry that it will make it more difficult for them, but it is certainly possible to get a mortgage but you may need to be a little different in your application.

How a student loan is considered in your application

A student loan will be looked at in a different way by lenders compared with other loans. They will lend you a sum of money based on your income. This will be your income before tax. As loan repayments are taken out in your tax code, then this will make no difference when they are calculating how much to lend you. Therefore, you will be treated the same as any other applicant.

However, a lender ill also want to look at your general spending patterns. They will want to see bank statements and see that you are managing your money well and that there will be enough to be able to afford the loan repayments. Your salary will be slightly lowered by your loan repayments, if you are earning above the threshold to have to make those payments. This means that you will need to ensure that you are not overspending each month so that the lender can see that you are responsible enough to lend money to. You may have to budget tightly for a few months so that you do this, but if you are struggling, then it may be that having a mortgage could be a risky idea anyway.

Tips to improve your situation

There are a few things that all mortgage applicants can do to give them a better chance of having their application accepted. If you have an outstanding student loan then it is even more important to make sure that you do everything that you can to make your application as good as possible.

– Check credit report – our individual credit report has details of past and present credit agreements as well as details of direct debits to utility companies and things like this. It allows companies to see how good you are at paying what you owe. It is wise to check it regularly to make sure that it is correct. If there is information on it that is incorrect, it could lead to you being turned down for a mortgage when you actually would otherwise have had one. You can check it for free and therefore it is well worth doing to ensure that it is correct and obviously to get changes made if there are errors with it.

– Save up a big deposit – mortgage borrowers are expected to pay a lump sum up front towards the cost of their new home. The amount will vary with the lenders. A while ago you could get no deposit mortgages, but these days it hard to find these and you will be expected to produce at least 5% if not more of the value of the property. The more that you can save up, the more impressed the lender will be as it shows that you are responsible and capable of handling your finances well. Also, if you save up more of a deposit, you will not have to borrow as much money. This means that your repayments will be lower and more manageable, so you are more likely to get approval for the mortgage. It will also make the mortgage cheaper for you as you will be paying less interest as you owe less money. Therefore there are many advantages of this.

– Earn lots and spend very little – in order to make your recent bank statements look great then you need to have lots of income and not too much in the way of spending so the lender can see that you are capable of making mortgage repayments each month. They may want to look at three bank statements and so it is wise to spend the months before you apply making sure that your account is healthy. Therefore being very frugal with what you are spending as also trying to get as much income coming in as you can. this might mean doing some extra hours at work, finding other ways to earn as well as cutting back to only buying the essentials and comparing prices to make sure that you are not paying more than necessary. It can be tough doing this, but it can be worth it if you get the mortgage approved and the skills you learn from it can be very useful in case you get into a position where you need to be careful with money in the future.