3 Ways Your Bank Is Costing You Money

Your bank is supposed to protect your money, not steal it.

Your bank is a fortress for your money. It's also the place you turn to when you need cash to finance a large purchase. Every bank presents itself as a humble servant just trying to do what's best for you, but this isn't always true. Here are three common ways your bank may actually be costing you money.

1. Bank fees

The most obvious way banks cost you money is through fees. Every bank has them, but there are usually more of them at brick-and-mortar banks -- because of their larger overhead costs -- and they're more expensive. Some common banking fees include:

• Monthly maintenance fees
• Wire transfer fees
• Stop payment fees
• Minimum balance fees
• Overdraft fees
• ATM fees
  

Your bank might waive some fees, including monthly maintenance fees, if you meet certain criteria, like maintaining a set minimum balance. You can avoid other fees by avoiding a particular service, like wire transfers. Then there are fees that your bank can't charge you unless you opt into them, like overdraft fees.

Your bank should have provided you with a full list of its fees when you opened your account. If you no longer have that list, reach out to your bank or check its website for more information. Be aware of the costs associated with owning the account or with common services you use, and consider switching banks if you aren't comfortable with what your current bank is charging you.

Online banks typically charge fewer fees, and ones that are more affordable, so this is an option worth considering if you're trying to hang onto more of your own money. But your online bank may not have an ATM close to you, and may not offer the personalized support you're used to, so this is something to weigh up as well.

2. High interest rates on loans

Higher interest rates on personal loans lead to larger monthly payments and cost you more over the lifetime of your loan. Interest rates fluctuate at all banks over time, so it's important to compare rates from several different companies to see which offers you the best deal before you make any commitments. Don't just focus on the APR, though. Look for things like prepayment penalties that could cost you money if you decided to pay your loan back ahead of schedule, and don't forget about loan origination fees, too. 

It could make sense to go with a bank that charges a slightly higher interest rate if you have a history of working with that institution and believe you'll have a hard time getting approved elsewhere. For example, if you have fair credit or you've been self-employed for less than two years, many banks might turn you away. So if you can leverage a previous relationship with a bank to secure the funds you need, that might be the smarter play, even if the interest rate isn't ideal.

3. Low interest rates on savings accounts

You'll accrue interest on the money you place in just about any savings account, but the interest rate varies widely. Some national brick-and-mortar banks only offer a measly 0.01% APY, while some of the top high-yield savings accounts can offer APYs upwards of 2%. This can have a significant impact on how quickly your money grows. 

Some checking accounts are also interest-bearing, though these are less common. You'll usually find them at online banks, and interest rates aren't generally as high as they are with savings accounts. This is another option worth exploring if you want to get the most money out of your bank.

Watch out for monthly maintenance fees that could negate any interest you're earning, and check if your bank offers a tiered interest system. This strategy gives the highest interest rates to customers with the largest balances, so if you only keep a small amount of money in savings, you might not get as much as you thought.

Again, you can't look at it from a cost perspective alone. You also need to think about customer support, online services, and how easy it is to access your money when you need it. But all else being equal, you might as well go where you'll get the most money.

Banks are businesses and they need cash to survive, too, but with the rise of online banking, it's a much more competitive space than it used to be. And that means more affordable options for you. Look into what you're paying at your current bank and consider going elsewhere if you can find a bank account with lower fees and a higher APY or a loan with more favorable terms.