The Four Letter Word Killing Your Finances...Fees

In 2013, banks charged over $30 billion dollars in overdraft fees and were caught posting the highest charges first, to expedite the overdraft situation.[1] While overdraft fees can be controlled by closely monitoring the balance in your bank, what about other fees? Every January and July you should go through your financial statements and see if you’re being charged any fees you might not know about. Eliminating fees and maximizing rewards, where you can, should be a semi-annual task for your finances. Here are some common fees to look for.

• Overdraft fees – Overdraft fees are the worst. You inherently don’t have money and then you have to pay even more money if you were to find yourself in that situation. The fees can be over $30 regardless of the amount overdrawn. Imagine if it were an interest rate. You could have to pay $30 for a $3 charge leaving you with an instant 1000% interest rate. The best way to avoid these fees is to monitor your bank account daily or weekly. You don’t have to balance to the penny, but checking your online account daily can be very helpful to make sure you don’t overdraw your account.
• Minimum balance fees – Ever since the financial crisis of 2008, these fees have become rare. But a lot of times people won’t read the fee breakdown or the bank simply won’t make it easy to find the fees. Reviewing your statements monthly can help you identify the fees. If your bank is currently charging you those minimum balance fees, then change banks immediately. Most banks no longer charge those types of fees, so finding a new one shouldn’t be a problem.
• ATM fees –USAA doesn’t charge a bank fee for using other ATMs and will refund you up to $15 a month in ATM fees (USAA serves military members and their dependents). A lot of people may be getting double charged and may not know it. If you use a non-bank ATM, the ATM may be charging you a fee and then your bank may be charging you a fee also. Some people can be losing $4-$7 each time they take out $20. This will quietly, yet quickly, drain your account and you may find yourself with overdraft or minimum balance fees because you weren’t tracking the ATM fees. To avoid these fees, find banks that don’t charge these fees or try to utilize your bank as much as possible to avoid the fees.
• Statement fees – In an effort to do the right thing and “go green” many banks will charge upwards of $3 to send out paper statements. It’s marketed as a positive initiative, but I assure you, it is a money-making scheme. You may have to go paperless with your bank to avoid these fees.
• Annual fees – These are common with credit card companies. Some credit cards offer fantastic rewards while charging an annual fee. You’ll have to do the math to determine if you’re making a profit with the rewards after the annual fee. If not, then switch credit cards to avoid those annual fees. That being said, I pay more in annual fees because I have the Air Force Club card which donates money to the Morale, Welfare and Recreation Fund. Also, when I first joined the Air Force, it was considered a professional courtesy for NCOs and Officers to be club members. But generally speaking, you should try and find a credit card without an annual fee.

There are many types of fees you should avoid. A quick search through your financial statements can help you identify these fees and then eliminate them. I helped one Airman (E2) recapture $25 a month by reducing all the fees. This was several years before the 2008 financial crisis, so hopefully everyone saw a decrease in the fees they were paying.

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[1] http://www.forbes.com/sites/greatspeculations/2014/05/29/banks-hike-overdraft-fees-after-regulatory-clampdown-hits-revenues/

The Power of Referrals

Being in the military means dealing with change. Frequent moving around involves frequently opening up new accounts with banks, service providers and utility companies. But do you know there is a way to cash in on all this?

Several companies often offer referrals to benefit the existing customer and the new customer. If everyone in the military started taking more advantage of these referrals, then we could really start making some money off our frequent moves.

In 2014, my family and I moved to Barksdale AFB, Louisiana. We bought a house and established our utilities by using the ones recommended to us by friends. But if the Housing Office or some private organization on every installation had a running list of referrals, then once you inprocessed, you could choose your service providers and then you would be provided a "referrer's" name to use, so both people make money. This list would be even more beneficial to those coming back from an overseas assignment since they would have to establish all new accounts versus transferring like CONUS-to-CONUS moves.

Here are two examples of what I'm talking about. But review the services you currently use and then look up the potential referral money you can pursue.

Dish Network: My family loves Dish Network. If someone refers a friend to Dish Network, they both get $50 off their next bill.

Internet Service Providers: Our local area uses Sudden Link for cable modem service (faster/cheaper than the DSL offered here). Their refer a friend gives $25 to both the referrer and the one being referred (is that considered a referee?).

Referral programs are important outside of frequent military moves too. Most banks and brokerage companies offer referral programs too. Here is an example from one of the banks I use:

Capital One 360: This is a separate bank I use solely for my emergency savings account. This bank, formerly known as ING Direct, pays both people $20 if customers open a bank account with $250 or more. If you are interested in this bank while reading this post, use this link to set an account with $250 or more: https://r.capitalone360.com/V1AVDPYTUb

I'm going to see if one of the private organizations I regularly participate in would allow me to establish this program. A new member to a unit could simply choose the service providers they would like to use, contact me, and I could provide a name, on a first in/first out basis, and both would benefit.