Wealthy people achieve their wealth in many different ways, but typically, those who maintain it stay wealthy for a reason: they do not spend any more than they have to on any item. That principle applies just as much to buying a smartphone or vacuum cleaner as it does to buying a multi-million dollar conglomerate.
One founding principle of spending only what is necessary: avoid fees whenever possible. Here are a few common fees that tend to trip up the average consumer.
- Late Payment Fees – With scheduling, discipline, and the occasional reminder, late fees are completely unnecessary. Set as many bills as possible on auto-pay and make sure you maintain a sufficient balance. Spread the auto-pay drawing days out if possible so that not every bill is paid at the same time. If you don’t, you could run into cash flow problems and experience the next fee on the list.
- Overdraft Fees – Again, discipline is the key, but you can also find a bank that provides free overdraft protection. Some banks allow you to use a savings account as a backup to protect you against overdrafts, while maintaining a better interest rate on your account.
- Hotel Fees – Cancellation or early check-in fees can run into significant dollars and are usually avoidable through proper planning. Cheaper hotel rates may have cancellation and other fees attached, so investigate your deal carefully. Other hotel fees to watch out for include mandatory “resort fees” covering items like Internet and pool access, and the stocked refreshment bar in your room that tempts you with high-priced drinks and treats.
- Airline Fees – Cheaper tickets sometimes come with associated fees. Make sure that you understand all the fees associated with each airline by reviewing their website. Check the baggage restriction on each airline to minimize your checked bag fees and avoid overweight bag charges. Try to fly with only carry-ons when possible (or fly Southwest, where two checked bags are still free). For trips with lots of luggage, see if it is cheaper to ship your luggage ahead to your destination.
- ATM Fees – Using ATMs outside of your bank’s network can rack up double fees — on the front end to use the other bank’s ATM, and then on the back end as your bank charges you for using someone else’s ATM. Limit use of other banks’ ATMs whenever possible and search for a bank that will refund ATM charges.
- Installment Payments – By splitting a larger purchase into multiple payments over time, you will end up paying more for the purchase in the long run. Whenever possible, pay in full, or pay with credit but pay off the bill in full at the end of the month. If you want to reduce your interest payments and lower your debt, try the free Debt Optimizer by MoneyTips.
- Credit Card Fees – Running a balance is an indirect fee, but cards have direct fees as well. Annual fees, foreign transaction fees, and similar charges can add up quickly. “You want to ask yourself, ‘What do I want to get from the card, and how do I use it?'” says CreditCard.com Senior Industry Analyst Matt Schulz. “That’s a good way to help you understand what cards are a good deal and what aren’t. Then once you figure that out, you look at things like interest rates, and which cards have the fewest fees, and that sort of thing. But it’s important to know thyself before you really apply for that card.” Search for a credit card that meets your needs with the limited number of attached fees. Cards with limited fees may have higher interest rates to compensate — but that’s not a problem if you never carry a balance, which should be your goal. If you want more credit, check out MoneyTips’ list of credit card offers.
- Car Rental Fees – If you already have auto insurance, you do not need to accept the often-overpriced collision waiver fee at the rental counter. Fill the tank with gas before returning it to avoid the airport refueling fees and higher gas costs. Avoid upgrades like a GPS or toll devices unless you really need them.
Take a long look at your spending habits and your bank and credit card policies. Are you passing up opportunities to cut your spending by eliminating unnecessary fees? Just thinking about fee eliminations will make you feel wealthier already — however, acting on them actually will make you wealthier. Today is the perfect day to make a change.