5 Banking Costs to Avoid This Holiday Shopping Season

Brennan Linsley/APBy Anisha Sekar

Deal hunting is a way of life for many Americans, especially in the heat of holiday shopping season. Many of us are even willing to forgo a warm Thanksgiving meal to camp out in the cold for a just little bit of savings.

Meanwhile, bank fees and other related costs of the holiday shopping craze can sneak up to cause unexpected damage to your personal finances. Luckily, these are often easily avoided with the right knowledge and strategies. Here are five fees and costs to avoid as you stock up on gifts.

1. ATM fees. Cash can be a powerful tool to help manage a shopping budget, but it does have its drawbacks. Using an ATM outside of your bank’s network can lead to extra fees. Your bank will typically charge you, sometimes up to $3 per transaction, and the ATM itself will levy an added charge for the convenience.

If the cash strategy is one you’d like to pursue, make sure to plan far ahead by withdrawing larger sums from your own bank before heading to the mall, where your only ATM options may be laden with fees.

2. Overdraft fees. One of the hallmarks of the holiday season is the tendency to overspend. With a debit card on hand, overspending might mean more than breaking your budget. It can also trigger insufficient funds charges if your bank balance drops too far. These fees can take a major toll, at often more than $30 each.

A simple way to avoid these charges is to opt out of your bank’s overdraft coverage, meaning you’ll be declined at the register for purchases you can’t afford. Of course, the most effective way to avoid these fees is to watch your balance carefully — an easy task with mobile banking.

3. Damaged credit. Credit cards are a popular payment method this time of year. For some, the appeal is in the rewards and discounts. For others, it’s the option to pay off your purchases at a later date. While these benefits are perfectly legitimate, misusing your credit cards while holiday shopping can damage your credit and cost you dearly over the long run.

To maintain a healthy credit score, make sure to keep your balances well under your credit limit. Also, shy away from store credit cards at each and every shopping stop, no matter how appealing the deal. Opening many credit accounts in a short timespan can be a red flag for credit reporting agencies because it may look like you’re desperate for credit.

4. Late fees. Between searching for bargains, holiday travel and spending time with family, paying bills is probably far from your mind in December. Unfortunately, credit card companies aren’t taking a vacation anytime soon, so you’re still on the hook for making regular monthly payments.

A late payment on your credit card bill this month could leave you saddled with a fee of up to $35. Set up automatic payments to your account to avoid a mindless mistake.

5. Theft liability. Sadly, along with the joy and generosity of the holiday season comes higher risk of theft and fraud. According to the credit bureau Equifax (EFX), consumers are more vulnerable to identity theft over the holidays due to crowded stores, online shopping and using several different cards.

While both debit and credit cards offer protections in case your card is lost or stolen, there are slight limitations and differences. With a credit card, your liability is capped at $50. Debit card users, on the other hand, may be liable for up to $500 if the loss is reported to the bank more than two business days after the incident occurs.

The best way to avoid paying for someone else’s charges is to keep a close eye on your cards at all times and report any missing ones to your bank immediately.

Anisha Sekar is the chief consumer advocate at NerdWallet, a website that offers comparison tools and personal finance advice.

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