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5 Ways You’re Getting Gouged with Bank Fees, and How to Escape

Bank Accounts

5 Ways You’re Getting Gouged with Bank Fees, and How to Escape

These days, the big traditional banks that dominate the banking industry are making a surprising amount of their profits from the aggressive fees they’re charging you.

Over the past 20 years, they’ve been steadily hiking up those fees, year after year. Today, those fees are at record highs.

They’ve gotten more and more brazen about it, too. Take the case of Joe Incorvaia, who was outraged because he felt like his bank kept ripping him off.

He got paid every other Friday, so he’d schedule his bills to be automatically paid that day. But too often, he said, Bank of America would take out the money to pay his bills first. This would cause him to overdraft, and he’d face multiple $35 fees. Then his paycheck would appear in his account — sometimes only minutes later.

“I don’t know if the bank’s timing was intentional or what, but it would go like, ‘Debit, debit, debit, overdraft, overdraft, overdraft, boom, boom, boom,’” says Incorvaia, a 62-year-old who lives in Bayonne, New Jersey. “I’d see my paycheck had cleared after that, and the difference could have been minutes. But I’m out 105 bucks in fees.”

5 Ways Your Bank is Probably Ripping You Off

Through Codetic, Incorvaia heard about an online account called Aspiration. It charges no overdraft fees, and there’s no minimum-balance requirement. Also, it gives you cash back and pays out higher interest rates on your savings.

“It was a no-brainer,” Incorvaia says.

He made the switch to Aspiration in 2017 and hasn’t looked back. Now, he no longer feels like he’s getting ripped off.

Here are five common ways your bank is probably ripping you off — but how switching to an Aspiration account will help.

1. They Get Rich Charging You Overdraft Fees

Nowadays, the average American pays nearly $100 a year in bank fees, according to data from the Consumer Financial Protection Bureau. And if you ever have overdrafts, you’re probably paying a lot more.

How often did Incorvaia get hit with overdraft fees? “Too many times to mention,” he says.

He’d call his bank to complain, but nobody seemed to care. He finally moved back all his scheduled bill payments to avoid overdrafting again. But that was an unnecessary hassle, and it sometimes made him late on his bills.

Aspiration doesn’t charge overdraft fees. In fact, it won’t let you overdraft. It’s a nice safety net to keep you from getting tangled in those $35 fees.

2. They Charge You Maintenance Fees

Bank of America charges a $14 maintenance fee every month unless you keep a minimum balance of $1,500. Lots of the other big banks charge monthly maintenance fees, too.

“That got tiresome as well,” Incorvaia recalls. “You’re watching your money just being eaten away by fees.”

Aspiration doesn’t require a minimum balance. It’s free to open an account, though Incorvaia pays $3.99 a month for “Aspiration Plus,” which offers some added benefits. Still, that’s a flat, planned fee. Nothing unexpected.

3. They Charge You ATM Fees

Joe Incorvaia switched to Aspiration after he was getting tired of overdraft fees from his old bank. Photo courtesy of Joe Incorvaia

Here’s another fee the big banks keep ratcheting up on you: ATM fees.

The average fee to use an out-of-network ATM has reached a record high of $4.72, which is up 33% over the past decade, according to Forbes.

With Aspiration, you have unlimited fee-free withdrawals at over 55,000 ATMs. With Aspiration Plus, you also get one free reimbursement per month for any out-of-network ATM.

“If there wasn’t a Bank of America around, I’d be paying a fee of at least $3 or more,” Incorvaia says. “Now, I can go take money out without a fee.”

4. They Don’t Pay You Interest

The big banks are notorious for not really paying you interest on the money you deposit with them — especially now that interest rates are really low.

Aspiration can afford to pay you interest because it’s not a bank and doesn’t have to pay for a zillion brick-and-mortar locations. So with Aspiration plus, you can earn up to 14 times the average interest on the money you set aside to save. (The FDIC reports the average interest rate is just 0.06% these days.)

“You’re getting a little something back,” Incorvaia says.

5. They Don’t Give You Cash Back on Purchases

With Aspiration Plus, you can get up to 10% cash back whenever you use the debit card. Normally, to get cash back on purchases, you have to qualify for a cash-back credit card — and not all of us are eligible. You actually need a pretty high credit score for that.

At Aspiration, the cash-back rates vary. Take groceries, for example: It gives you .5% cash back at Walmart and Target, and 5% cash back at Brandless. (For a full list of cash-back percentages, visit Aspiration’s website).

That’s a nice feature — but to be honest, Incorvaia isn’t super focused on that. He’s more focused on the lack of sneaky, painful fees coming his way. He’s still burning about his experience with the big banks.

How to Never Give the Big Banks Another Penny

Here’s how Incorvaia sums up his experience with Aspiration: “Freedom from fees.”

Incorvaia has been with Aspiration for three years now, and he’s had no problem adjusting to using Aspiration’s Spend & Save Account. He’s found that he can easily do everything he’d normally do at a brick-and-mortar branch.

“It seems to me the traditional banks had better change the way they operate,” he says.

Opening an account with Aspiration is free. The monthly $3.99 Aspiration Plus option will get you higher savings, fewer ATM fees and extra cash back.

Mike Brassfield is a senior writer for Codetic.

The experience of Incorvaia may not be representative of every Aspiration customer.

Aspiration Financial, LLC is a SEC and FINRA registered broker-dealer offering cash management accounts. Neither Aspiration Partners, Inc. nor any of its subsidiaries is a Bank. 

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