Money management is the primary key to being financially stable and financially happy. Most people who manage money tend to do so with the help of a banking account. Rather that account is for savings purposes or making daily purchases, it is important to understand that with bank accounts, there are certain fees to stay away from, like insufficient funds or late fees. However, one must consider that some beneficial parts of managing money involve using your money on bank fees that are actually worth paying. Some of those fees include:
- Overdraft protection
- Balance transfer fees
- Annual fees
- Mortgage discount points, and
- Refinancing fees
Below are brief explanations of these bank fees and why they are definitely fees that are worth paying.
Suppose you are in your local grocery store to pick up some last minute items. You are unsure if you have enough in your account to cover the entire bill, but you swipe your bank card to discover that the charge went through. Later, you also discover that instead of paying the total given at the register, you pay a $35 overage because your original balance was not enough to cover the expenses. Although it is never a good idea to let your account get too low, overdraft protection allows you to make a purchase but charges a small fee to take care of what your account did not already have. The overdraft protection is a banking fee that is well worth paying in an attempt to avoid an insufficient funds penalty toward your bank account. Your bank provider is required by the law to inform you of this option. When added, the bank account holder is expected to pay a monthly fee, which typically falls between $10 and $12. Overdraft protection is a much better option than a nonsufficient funds charge.
Owning a credit card could save a lot of stress when it comes to making purchases. A credit card especially comes in handy in case of an emergency. Because a credit card is usually to make purchases with the intent to pay later, it would be easy to build up an outstanding balance. When the interest rate on the credit card is a number in the double digits, your payoff amount could equal almost triple of what the item was that you bought. Spending the extra cash on balance transfer fees allows you to transfer your debt to a separate card. Some credit card providers allow you to pay off the balance of your interest. This bank fee that is worth paying is a one-time free that ranges between 3% and 5% of your total credit card balance. This option prevents you from spending years to pay off a big credit card balance.
When getting a credit card, annual fees could seem like a daunting fee to pay. You are already aware of the other charges that come along with a credit card, but instead you would rather opt out when it comes to annual fees. However, annual fees are bank fees that are worth paying because they are more beneficial for you than you may think. According to Mike Jelinek, a contributor to ClarkHoward.com, “paying an annual fee for a credit card typically means you will get more benefits… it comes down to your purchasing decisions and spending habits.” Jelinek agrees that paying annual fees on reward cards will pay itself off in the end. There are many benefits to paying annual fees. Below is a list of some of the rewards of paying annual fees:
- Travel insurance
- Airline points
- Reduced interest
- Extended warranties on items
- Loss protection
The amount paid for annual fees range widely and can be anywhere from $25 to $450 depending on the card that you receive.
Mortgage Discount Points
When purchasing a new home, the term mortgage comes highly into play. Almost everyone who buys a new home will be faced with paying a mortgage, and with a mortgage will come a fixed mortgage loan interest fee. But, no fee is actually fixed when there are discounts that could make the fee lower. Mortgage discount points are prepaid interest on a mortgage loan. This type of banking fee is worth paying because the more discount points you pay, the lower your interest rate becomes on your mortgage loan. These fees usually run from zero to 4 points. According to some information noted by Fox Business, mortgage points cost approximately 1% of the loan amount. Mortgage discount points are also a deductible on your taxes.
Sometimes, making payment can get too difficult, and you may find yourself forced to skip payments. Missing payments can result in the build-up of interest rate fees, late fees, and possible termination of the service or product that you are making payments towards. Here is where refinancing would be a great idea in case payments get too far behind and you are looking for a means to start over with payments. Refinancing is a bank fee that is worth paying because the process allows for more manageable payments and lower interest rates. There are several other fees involved during the refinancing process. Companies may charge fees for applications, preparing documents for signatures, appraisals, and title examination fees.
When it comes to managing your money, fees can be seen as a bad thing and something to avoid. However, there are five particular bank fees that are set in place to help, not hinder your finances. These fees are worth paying and will help you in making you and your wallet happier.