I’ve seen enough bank statements to know just how dopey people can be about what they’ll pay in bank fees. Some folks pay more than they need to because they insist on sticking with an account they’ve had since Betty White was in diapers.
Others insist on using their bank accounts like wallets, indiscriminately pulling money from whichever ATM is at hand, and paying $3 on a $20 withdrawal. Stupid! If you’re tired of paying through the nose for bank fees, you can shop around for a no fee account or you can be smart about how you manage your bank balance to eliminate your fees entirely.
This is where your savings can save you money. Some chequing accounts give you all your transactions for free when you maintain a minimum monthly balance of, say, $1,000. So if you take $1,000 from your emergency fund and stick it in your chequing account, it can do double duty: it’ll be there when the caca hits the fan and, in the meantime, it’ll help you to save on bank fees.
The trick, of course, is to never touch the $1,000. It’s a float that doesn’t really exist in terms of what you have to spend. This is where the “smart” comes in. You have to be disciplined enough not to spend that money. If you’re keeping a spending journal – you are keeping a spending journal, right? – then you’d simply never count the $1,000 at the bottom of your cash pool. Since you don’t have it in your “balance” you can’t see it to spend it.
If you’re living with a partner who is not as disciplined as you and you want this to work, you need to make it very clear that the last $1,000 in the account is UNTOUCHABLE. There can’t be any wavering on this issue. If the $1,000 is eroded at all and you have to top it up with more money from your emergency fund, your emergency fund will have sprung a leak and it’s only a matter of time before it’s all gone, never mind the bank fees you’ll incur while the balance is below $1,000.
But if you have the discipline and the self-control to leave that money sitting in your account to save on bank charges, it could be worth between $120 and $350 in bank fees saved. At the bottom-end of the savings scale that’s a 12% return on your money… tax free!