How to reduce your bank fees

If you can squeeze a little bit more out of your bank by reducing the fees you pay to it or increase the amount of interest you earn, you'll save money over the long term and ease the burden on the family finances in the short term.

So here are some tips for reducing the fees you pay to your bank and increasing the interest you earn.

Check you're in the right account

The first step is to check you've got your money in the right account. Most banks offer a higher interest rate if you keep a certain amount of money in an account over an agreed period of time.

If you've got some money in one of these high interest-bearing accounts, the trick is to make sure you consistently meet the minimum balance required so your money earns interest at the highest rate possible.

Avoid being overdrawn

Banks routinely charge a fee if you're overdrawn - sometimes these fees are $40 or more. To avoid this fee, don't overdraw your account. Some banks offer an SMS alert if your account is almost overdrawn and it's worth signing up for this to avoid paying unnecessary fees.

Reduce your fees

Banks also often charge you if you go over a certain number of transactions each month, for example you might only be able to make five cash withdrawals from ATMs per month before a fee is charged.

So make sure you keep an eye on the restrictions associated with your account and try not to exceed the maximum number of transactions you can make before incurring a fee.

One of the newest fees in this category is the $2 transaction fee most people have to pay if they withdraw money from an ATM not owned by their bank. Make even one withdrawal a week from an ATM not owned by your bank and you're out of pocket by more than $100 a year, so keep this in mind next time you're withdrawing money from an ATM.

Bank online

Another great way to reduce your fees is to do most of your banking online or via an automated phone banking service. Most banks have no charges attached to their online banking service - whereas most charge for over the counter services such as drawing a bank cheque.

It's worthwhile banking online as much as possible, as well as using services such as BPAY to pay your bills, which is also free.

No two accounts are the same and if you're thinking about changing banks or opening a new account it pays to do your research to find out what fees and charges you'll be hit with as well as what fees the banks charge for additional services, for example cashing an overseas cheque.

Building societies and credit unions also offer competitive fees and charges and it's worth looking at the different types of accounts and fees of these institutions, as well as the fees charged by the smaller banks, before selecting the institution that will be your major banking provider.