008 - Avoid Bank Fees at all Cost

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Publish Date Jan. 30, 2017
Podcast URL http://www.choosefi.com/008
Tags banking emergencyfunds lifeoptimization podcaster savings


Time Speaker Text Tags
0 - 8 Jonathan Mendonsa OK so today's title is going to be bank fees. Why they're evil and how to avoid them. OK Brad it's all yours. Take it away.
8 - 23 Brad Barrett All right thanks Jonathan. So yeah I'm a mild mannered account in most of my life. You don't see me getting getting too agitated about things. But but inside sometimes I see over some of these financial mistakes I see people making.
23 - 31 Jonathan Mendonsa That's the funniest thing when I see Brad angry. It's hilarious. He goes there and he comes right there back comes out then comes back.
31 - 75 Brad Barrett I try very very hard to just be my nice normal self most of the time and just stay pretty even keel. But but you know some of these things they just they annoy me so much because I know people are making mistakes that are just so detrimental to their lives. And and I don't know why I don't know why they can't avoid them. And it frustrates me and it's again it's it's not me being an elitist jerk it's that's not how I think at all. It's just I wish that I could help people honestly. And it annoys me that I can't. So today we're just going to talk about bank fees and why you should avoid them at all costs. I. My wife was reading some article just after the New Year about that Americans and this number could be wrong but she read this in an article on The Washington Post.
75 - 77 Jonathan Mendonsa It's On Facebook it must be true.
77 - 149 Brad Barrett Oh it's got to be true that Americans paid thirty two billion dollars billion with a B in overdraft fees alone to their banks in the year 2016. Wow. That is a crazy crazy number in my opinion. Bank fees are one of the easiest things to avoid. You should never pay a bank fee. I mean I I use my banks and my credit cards which I consider loosely the same essentially as financial tools that are ultra ultra powerful that I am getting for free. It's like a bonanza for me. I can't believe it sometimes that these banks are clamoring for my business and I don't pay them one penny. I mean obviously an intelligent person would say they're getting some of my money at very very low interest and they're using it to make loans and make the spread on that interests. And honestly I'm fine with that. But for my purposes I am getting these bank accounts and credit cards for no fees $0. But yet Americans at large are paying billions upon billions of dollars in fees and overdraft fees are the most ridiculous ones. I mean that means as you know Jonathan likes to joke. You know my my saying Is your hair is on fire. Your house is on fire. Like what the heck is wrong with you.
Brad_Catchphrases, banking
149 - 153 Jonathan Mendonsa I liked it when he said it the first time much better.
153 - 155 Brad Barrett You know what what.
155 - 159 Jonathan Mendonsa Brad unfiltered Yeah. But now you can stay filtered Brad that's fine. I don't think we're ready for you quite yet.
159 - 164 Brad Barrett Right right right. Yeah that's not going to make the public podcast. I think we wouldn't be G-rated anymore.
164 - 168 Jonathan Mendonsa They made me rate it on iTunes and I would definitely have to change it.
168 - 246 Brad Barrett Overdraft fees mean you have no money in your account. You have negative money. And the bank is essentially loaning you a tiny little bit of money and they are charging you in many cases these overdraft fees are like $35 a pop. Right. Yeah that's it. And so I mean that means you have let's say 20 dollars in your account and you wrote a check for 100 instead of the bank saying sorry you have $20 we're not going to give you anything. They say sure we'll give you this extra $80 you just need to pay us 35 on top of it all. I mean that is crazy talk. A You need money. If you don't have an emergency fund we've talked about this before. If you don't have a thousand dollars to your name stop everything. Stop wasting money stop buying clothes. Stop going out to eat. Stop getting Starbucks. Stop the garbage. Save some money. It's not that hard. Honestly it's really. I mean over a course of months if you can save a couple hundred dollars a thousand dollars there was something dramatically wrong with your life and you need to figure it out. Yeah right. You are at an emergency level. It's as if you're having a heart attack. What are you going to do. Just sit there and know you're going to call 911 if you have no money and you are incurring overdraft fees. You are having a heart attack. It is that simple.
banking, emergencyfunds
246 - 247 Jonathan Mendonsa Absolutely.
247 - 304 Brad Barrett Cut it out. Figure out what's going wrong and just save some money. I'm not talking about saving tens of thousands of dollars. Save $100 a month see $50 a month $50 a month over a year. It's 600 bucks. Now to Jonathan and I. That sounds like a small amount of money but to most people that could be a life saving amount of money and you don't get hit with these onerous fees these crazy fees that if you don't have any money to begin with and you're spending multiple overdraft fees at thirty five dollars a pop. That's crazy talk and it adds up to big money real quick. You get two of those a month $70 a month $840 a year. If you have no money $840 year is a whole heck of a lot of money. Right. And if you are hitting those fees you're probably lazy with other fees you're probably lazy with ETM fees. Now I don't know Jonathan and I don't use cash and I realize I can have a dollar in my wallet.
Brad_Catchphrases, savings
304 - 306 Jonathan Mendonsa I would charge 40 cents. I really would.
306 - 320 Brad Barrett Yeah. Oh yeah. I would charge any amount of money. I don't feel bad about it. We're not getting hit with interest but for late payments or minimum payments but many people are you know these seem people who are hitting getting hit with overdraft fees they're paying interest on their credit card. Stop it.
321 - 325 Jonathan Mendonsa I'm just sitting over here just nodding my head. Yes preach it brother.
325 - 332 Brad Barrett I mean right. Come on If you don't have money don't charge any more. Just stop immediately.
332 - 340 Jonathan Mendonsa And don't just do that come up with a plan to simplify your life. I mean I'm squirming over here for a second because I did have an overdraft last year.
340 - 341 Brad Barrett Ooh.
341 - 398 Jonathan Mendonsa Yes. Yes this is this is the one. So I have made it my goal to simplify every aspect of my of my financial life I want everything to be automated. I don't want to have to send a check in so everything comes out of a. You know a bank account automatically each month and then I just track it using mint or Mint.com. That's an app that you can get on your phone and I just make sure that everything's working. And it does. And I have different accounts for different types of personal expenses that we use. But one time I got a little too smart for my own good and I had an overdraft. But for me in my particular situation I did not get hit with an overdraft fee. My bank and I USAA has something set up so you can actually just link your credit card to your various bank accounts. You have with them and if for some reason something were to go over on one of those accounts it will just send that to that amount that amount would be covered by your credit card so you will never get hit with a fee. So that's my confession I want to put out that I can give you some more tips on that if you want to simplify your life. But I just had to confess.
398 - 424 Brad Barrett Yeah I mean and you know that's not bad because at least you were smart enough to set up that program right. That goes to your credit card you didn't get hit with that $35 fee. So that's not too terrible in the grand scheme of things. Obviously you have your finances set up in a very unique way and it works for you and it's fantastic so that I'm OK with. But it's you know it's that person who has no money who is getting hit with a $35 fee or a four or five dollar ATM fee.
424 - 440 Jonathan Mendonsa Every time those add up. And he's right your hair's on fire you are having a financial emergency. And if you think oh it's just a one time thing and you know but you're also paying the minimum payments on your credit card. I mean these fees are just eat you eat you up. So you've got to come up with an action plan for that.
440 - 478 Brad Barrett And that's that's exactly what I was going to say to conclude this is this is an actionable tip. Stop paying bank fees. Figure it out. ATM fees. That's really easy to cut out a just plan ahead. Have some foresight if you actually need cash which you really shouldn't. In the grand scheme of things go to your actual bank and don't incur the fees. You know most banks when you go to your own branch you're not paying an ATM fee or take an extra two minutes walk inside the branch and make a withdrawal. If by some freak chance your bank does hit you with a fee. So that takes a little bit of planning but come on man don't spend $5 in fees every time you need a little bit of cash.
478 - 522 Jonathan Mendonsa And I have a couple other life hacks if you all want I'm just actionable tips to stack onto this in terms of avoiding fees. Your bank needs to compete for your business like Brad was talking about there being able to use your money in essentially low interest and that the margin is helping them out. They need to be competitive. And so what Brad said is a hundred percent right if you're getting hit with fees and you're being sloppy. And you know what you need to come up with an action plan and get it corrected. But this is the first and only time it happened and it was a genuine mistake and it's never going to happen again. You need to call your bank to say hey look this hasn't happened before. Can you waive the fee because they usually will waive the first and if they say no and it is truly your first one you should tell them that you're going to move your business to another bank and I guarantee you they will find that change a policy very quickly. And I can. I've seen that before.
banking, lifeoptimization
522 - 640 Brad Barrett Jonathan is exactly right there. That is a perfect perfect tip. These banks want your business. They absolutely do and I have you know my own little confession to make which is one of my business bank accounts. We had a Essentially the business had had more or less stopped and you know we had a couple of hundred bucks in there and it was getting hit with a low bounce fee. All right. I guess when we had signed up for this account we said we were going to keep $500 average daily balance which sounded like we thought we are going to have a successful business. And that seemed pretty pretty straightforward to me. So I agreed to it at the time but I got lazy I didn't check that account because it was a business that had basically gone dormant. We had a couple of hundred bucks in there and I frankly didn't even notice that it went from $320 to $310 the next month. We are getting hit with a $10 fee per month $120 a year. And I didn't notice and that was absolutely laziness on my part. So this can happen to anyone no matter how smart you think you are. This unquestionably can but what I did was I have a real good relationship with the branch manager at my local branch of Wells Fargo. I shot him an email and said hey I get hit with this fee the last four months. What can we do about it. Can I change my account. Can we can we get it waived. Going forward what can you do for me. He shot me an email back within an hour said I set it up to give you a grace period for X number of months I forgot it was three or six something like that. And he actually took off all the prior expenses. So we got $40 credited back to our account and no fees going forward for X number of months and I went up you know closing the bank accounts stop being lazy and there was a winning situation. I took Jonathan's advice and just just reached out that took me one tiny little e-mail that took 30 seconds to compose I earned 40 bucks and then $10 a month going forward it was a $100 email for 30 seconds. That's that's a pretty good return on investment on your time.
640 - 717 Jonathan Mendonsa And I've got two other little life hacks for you here one of them is make sure your bank is being competitive. Now some people do need to have local branches but some people don't. I am a completely digital guy. I am automated on everything. I do not need a local branch. And so I have USAA it's available if you have any family member in the service at any point time you can get it and so USAA does not have any sort of minimum fee. It's just $25 open account and then it's yours it's fine there's no fees there. They don't have any actual atriums so they will allow you to use any HVM in the country at no charge and actually refund you up to $15 a month in ATM fees so I am completely I have any and every ATM . And so I don't know that you know that's my experience with USAA they're real solid. And then again I can leave my credit card to my accounts if I have an overdraft it just goes on the credit card so your bank may be charging you excessive fees and I have a feeling probably the ones that have the bigger branch locations where they have more overhead are probably more guilty of this than maybe the smaller more lightweight ones. And I don't know exactly where to point to other than USA just because I don't really use too many other people but make sure that your bank is actually being competitive with their fees and that if you if you are just eating it left and right like they're charging you for the favor of you having a checking account with them on a personal account then you might want to look into seeing if somebody else would be a little bit more competitive.
banking, lifeoptimization
717 - 843 Brad Barrett Yeah and that's a great point. And there are always options. That's what you need to realize here. Right. If you're getting hit with fees. You know I don't want to belabor this and make this into a 40 minute podcast if you are getting hit with fees. You need to figure it out because I pay $0 in fees and it's really pretty simple. You know there are always options so if you find that you're getting hit with a monthly fee on your checking account. Walk yourself into the branch sit down with a business with a banker and they'll help you and these people are customer service representatives essentially. You know they want your business. They understand that if you leave Wells-Fargo you can go to Citibank or capital one or chase or whomever. There are all these different options local options credit unions whatever they want your business they don't want to lose you and they're not going to lose you over a $10 fee. They're just simply not. And what it means probably is you signed up for a bad account originally or you didn't realize what your what your needs actually were. And there are plenty of no fee options. They will find one for you and threaten to leave if you have to. I don't think it will come to that. Honestly they're not going to want to lose you as a customer over 10 bucks a month. So just sit down have a very pleasant conversation and figure it out. And just the last word an overdraft since those are the most significant fees. There are ways to shut them off if you're in this emergency situation where you know you're actually getting help with these things. You should really consider either age doing what Jonathan did which is linking it to your credit card if that's an option finding some no fee way to do this or to just simply shut it off. If you don't have if you have $20 in your account and you want to write $100 check you don't deserve that extra $80. You really don't. And it's certainly not worth paying $3000 fee for it. So that's a very strong consideration. I hate to give blanket advice because you know listen you might have some extraordinary situation where you need that and that's a good piece of mind for you. OK. That's fine. But strongly consider walking yourself into that branch sitting down with a banker and just trying to come up with a plan. Save yourself a couple of hundred bucks a year and you're going to be a lot healthier financially.
banking, podcaster

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