Dave Ramsey Warns About This 'Old Bait and Switch' When Opening a New Bank Account. Here's How to Avoid It
- Opening the right bank account is important, so it's a good idea to do your research first.
- Dave Ramsey has a warning about certain accounts.
- He said they offer special introductory offers but chain you to an account with high fees.
You don't want to fall for this trick, so be sure to heed Ramsey's warning.
When you open a bank account, you need to make sure you research all of your options carefully to get the right one. You also need to be on the lookout for terms and conditions that could adversely impact your experience over the long term.
In particular, there's one key thing that finance expert Dave Ramsey warns about when you're looking for a bank to open an account with.
Dave Ramsey has an important warning to consider before opening a bank account
When it comes to picking a bank, Ramsey has some important advice that everyone should read.
"Be careful of the old bait and switch," he said. "You may get introductory freebies for a while but get chained to higher fees later."
These bank fees can really add up, as you could get charged for a wide variety of routine banking behaviors. And if you've been enticed by offers of a signup bonus or debit card rewards in hopes that your bank account will help you grow your wealth, this could backfire if you end up having to pay extra for every little thing you do when using your bank to manage your money.
"These can bleed you dry, so find out the amount banks charge in ATM fees, foreign transaction fees, and card replacement fees," Ramsey advised. "A lot of banks and credit unions offer free checking, which means they won't hit you with minimum balance charges or monthly maintenance fees."
How can you make sure you don't have to pay high fees for banking?
In order to heed Ramsey's warning and ensure you do not end up getting hit with tons of fees just for accessing your money or using your debit card when abroad, you should be sure to read all of the terms and conditions carefully.
Banks need to provide you with a schedule of fees and an explanation for when each cost will be triggered. If you take a close look at this document, you can find out what you'd have to pay extra for and can see if it will affect you. For example, if you never travel abroad then you may not care about foreign transaction fees -- but if you sometimes don't have a lot of money in your bank account, then you may want to prioritize picking a bank that does not charge overdraft fees.
You can compare the different fees you'd pay with several different brick-and-mortar banks, as well as with online banks and credit unions. As Ramsey suggests, credit unions may be less likely than banks to impose extra charges on you. Online banks also tend to be less likely to tack on a bunch of costs compared with some of the more traditional financial institutions.
Since it can be a big hassle to close down one bank account and open up a new one, it's worth taking the time to research these fees and find the right place to put your money from the start. Just as Ramsey said, don't focus on the introductory offer, but look at what your banking relationship will cost you over time.
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