Living Paycheck to Paycheck? Tips for Avoiding Extra Fees

When you’re living paycheck to paycheck, every dollar counts. Even small, unnecessary fees can quickly add up and throw your budget out of whack. While avoiding all fees may not be possible when money is extremely tight, there are steps you can take to reduce unnecessary charges and hold onto more of your hard-earned cash.

Watch Out for Overdraft Fees

Overdraft fees from your bank can rapidly multiply if you aren’t careful. Many banks will charge a fee, typically around $35, for each transaction that is approved despite insufficient funds in your account. Just a few overdrafts can easily total over $100 in fees per month. To avoid this:

• Track your account balance closely and don’t rely solely on online banking apps, as they may not show pending transactions that could cause an overdraft later.
• Set up account alerts to be notified when your balance drops below a set threshold, say $50 or $100.
• Link your checking account to a savings account and turn on automatic overdraft transfers to avoid fees (though savings account transfer fees may still apply).
• Consider opting out of overdraft coverage altogether, rejecting any transactions that would overdraw your account. Just be aware payments may be returned unpaid and merchants may charge you additional fees.

Avoid Late Payment and Interest Fees

Pay all bills by their due dates not only to avoid late fees, but also extra interest charges on credit cards and loans that can accumulate quickly. If you are struggling to pay on time:

• Contact service providers as soon as you suspect you may miss a due date and ask for an extension or waived late fees due to financial hardship.
• Set payment reminders to avoid accidentally forgetting due dates.
• Prioritize bills carefully, paying essential utilities and housing expenses first while delaying less vital expenses if absolutely needed. Consider sources of assistance if you cannot cover all bills.

Beware of ATM Fees

Out-of-network ATM fees can range from $2 to $5 per transaction, not including charges your own bank may levy. To avoid unnecessary charges:

• Plan cash withdrawals to use your own bank’s ATM whenever possible.
• When using out-of-network machines, opt to withdraw larger sums less frequently rather than small amounts multiple times per week.
• Before traveling, locate partner ATMs you can use for free or reduced cost.
• Consider ditching cash altogether and stick to debit card transactions to avoid fees.

Watch Your Activity Fees

From monthly account maintenance charges to fees for replacing worn out debit cards or paper checks, banks can nickel-and-dime consumers in lots of subtle ways. Comb through your bank fee schedule and account statements closely to identity unnecessary costs, then talk to your bank about eliminating any fees you are incurring that feel unfair for your situation.

If banks refuse to budge on fees, shop around to compare checking accounts at smaller banks and credit unions, many of which offer basic checking accounts with no monthly fees and lower balance requirements. Opening a new fee-free checking account may be well worth your time.

Avoid Expensive Payment Processing with Cash or Debit

Business that accept credit and debit cards pass along processing fees to consumers in higher prices. Where possible, pay with debit cards or cash to avoid indirectly footing the bill for merchant fees. Note some businesses also charge separate fees for debit versus credit transactions due to differences in processing costs, so choose the cheapest payment method.

Pay Attention to Payroll Deduction and Check Cashing Fees

Workers living paycheck to paycheck often cannot afford even small cuts to their take-home pay from check cashing fees and prepaid payroll card charges. Get to know your workplace payroll system and policies regarding pay options and deductions to avoid easily preventable fees:

• Lobby your employer for affordable direct deposit options that allow you to put the full value of your check directly into a checking account at no cost.
• Review payroll card terms, automatic deductions, and fees carefully so you can make an informed decision whether it is worthwhile.
• Avoid pricey check cashing services if at all possible and ask your bank about short-term assistance if you need help covering basic bills while waiting for payday.

Cut Down on Money Transfer Charges

Apps like Venmo, PayPal, and CashApp make quickly transferring money to friends and family convenient. But the standard instant transfer options often come with fees ranging from 1 to 2 percent of the transaction value. To keep more money in your pockets:

• Double check app FAQs about costs for various types of sends and requests to understand when fees apply.
• Select standard delivery options that take 1-3 business days instead of instant transfers.
• See if your chosen app or bank offer ways to quickly send money at no cost, either through balance withdrawals or linked debit cards/bank accounts.

Living without extra padding in your budget means every dollar leakage via fees hurts. While not all charges can be evaded, hopefully putting the above tips to work will help you plug at least few of the unnecessary drains on your finances.

Monitoring spending vigilantly, asking providers for fee waivers, searching for checking accounts with lower or no fees, and tweaking your payment processes can put at least an extra $50-100 dollars back in your wallet each month. And avoiding unnecessary fees may help take a bit of the constant financial stress out of living paycheck to paycheck as well.