“Life is a cruel teacher. She loves to give you the test first and the lesson later.” ― Daymond John star of “Shark Tank”

They say hindsight is 20/20. That just means It’s easy to know the right thing to do after something has happened, but it’s hard to predict the future. Hindsight means thinking about things after they’ve happened.

When I was younger and got my first credit card, I did not realize all the little nuances that come along with carrying a little square piece of plastic. Those lessons came later.

See my post Avoid paying interest and get rich 

For instance, the bank likes to play a game called name that fee: Deposit fees. Transaction fees. Insufficient funds fees. ATM Withdrawal fees. Annual fees. Inactivity fees. Checking account fees. Mortgage fees. Credit card fees.

Fees are big business in banking. In some cases, banks are making 40 percent of their income from fees! Fees!!!! That requires no work on the banks part. That’s all pure income. Big profits indeed.

The Credit CARD Act of 2009 has tried to limit these fees and help consumers, but the banks can still create new fees.

There is no cap on fees. And no limit on how high they could go as there is no regulatory limit on what banks can charge for service fees on deposit accounts.

How do I know that?

I did my research.

However, there is a limit on what amount of interest a credit union can charge you to lend out their money to you. It’s an 18 percent rate cap.

How do I know all this?

I did my homework. I also work in lending.

Today, I share with you what you can do differently.

What it will cost you? $0

How much can it save you? Potentially, over $150,000.

Let’s begin.

FEES ARE EVERYWHERE

Your challenge, should you choose to accept it, is to avoid ALL fees!

ATM FEES

Service: Transaction at another bank’s ATM
Average Fee: $2.00
Explanation: This is the fee that an average bank charges for using an ATM outside its network. Sometimes they will add on another $1.00 fee for your bank to process it!

Service: Non-customer ATM transaction
Average Fee: $3.00
Explanation: This is what the average bank charges non-customers to use its ATMs. Combined with the ‘foreign’ ATM fee (yes, another fee) charged by your own bank (see above), you’re looking at $4.20 in service charges for using another bank’s ATM.

CHECKING AND SAVING ACCOUNTS FEES

Service: Monthly Fee for Checking Account
Average Fee: $10.00
Explanation: This is the average monthly fee charged by the bank to house your money for a standard checking account . Fortunately, these fees are typically avoided by maintaining a minimum balance or meeting some other criteria. Usually a monthly direct deposit will allow you to avoid this fee. However, it usually requires a minimum of $500 or more per month. This can be difficult for part-time worker or student. If you are a student, usually there are student accounts that will waive this fee. You can also look for banks with free checking.

Service: Monthly Fee for Savings Account
Average Fee: $5.00
Explanation: This is the average monthly charge for a standard savings account, which can usually be avoided by meeting certain criteria like establishing a regular direct deposit to the account or maintaining a minimum balance.

CREDIT CARD FEES

Service: Minimum Interest Fee
Average Fee: $1.50
Explanation: This is the average monthly charge for holding a credit card in your wallet. Check your credit card agreements and statements to see if your bank charges this fee.

Service: Late Fee
Average Fee: $38.00
Explanation: This is the fee charged for every late payment you make to your credit card.  Which can obviously be avoided by paying on time, but what about when you forget. The only way to truly avoid this is to set up an automatic payment so that you never miss a payment again. This fee is egregious.

Service: Annual Fee
Average Fee: $29.00
Explanation: This is the average annual fee a credit card company will charge you to say what’s in your wallet? Fees can go as high as $450.00 a year the more exclusive the card.  This fee can usually be avoided only applying for credit cards with no annual fee.

Service: Return Check Fee
Average Fee: $25.00
Explanation: This is the average charge for non-sufficient funds and being unable to cover a check. This can usually be avoided by making sure you only write checks when the funds are available in your account. You definitely don’t want to rack up too many of these fees. You will get put on the bad check writing list. It’s called ChexSystems. It can cause banks not to do business with you.  Essentially, making you bankless. It is designed for people with bad credit or banking histories. Reported information usually is removed from your ChexSystems file after five years!

ALL THOSE FEES ADD UP

If you start adding up all these fees, you see how much it could cost you and how you could slowly drip (like a slow roast cup of coffee) a small fortune away out of your wallet.

ATM Fee: $3.00

Checking Account Fee: $10.00

Savings Account Fee: $5.00

Return Check Fee: $25.00

Late Payment Fee: $38

Annual Fee: $29.00

Total: $110.00 per month or $1,320 per year

You do this for 30 years and you spent $39,600.

If you invest this money instead, with an 8% return and you could have $161,000! Yes, that’s USD.

By no means will this turn you into an overnight millionaire, but it has the potential to give you the foundation to set you up pretty good for later in life.

The banks know what they are doing. You have to pay to play. In order for them to house your money, you have to pay for the convenience and service.

The problem is that they pay measly amounts of interest on their savings and checking accounts.

You receive a 0.10% return on the money you let them hold, which they ultimately can lend out and invest and make deals to increase their honeypot. On the other hand, when they lend you money it can cost upwards of 29.99%!

So, let’s break this down. We give you thousands of dollars to hold. You pay us less than 1%. You lend us thousands of dollars and we pay you 29%. Sure, that seems fair.

I guess in the law of supply and demand the customers are not always right.

Even though, they need us to make money.

But borrowing is borrowing. You have to pay to borrow. That’s just the way it is. The only way to get around this is not to borrow.

Yes, that last sentence is $161,000 advice I just gave you. Your welcome.