Eliminate Automatic Draft Fees
A couple months back my wife and I refinanced our home mortgage. It was a long process but I feel like I learned a lot along the way. A friend passed on a hint about lowering title insurance fees and now I’ve got another suggestions to share – don’t pay draft fees.
Payment Options
After the ink was dry, I went through my lenders online interface to mange my account. One big decision was what payment plan to select. Here are all the automatic withdrawal payment options.
- Once per month
- Twice per month
- Every two weeks
- Once per week
None of them feature an enrollment fee but several include per transaction fees. That means every time the lender initiates an automatic withdrawal, I pay between $0 and $6 dollars. It doesn’t sound like much until you consider that I’ll make somewhere around 360 payments (depending on payment plan) over the course of the loan. So, using $4.00 for my example:
360 × $4.00 = $1,440 in transaction fees
Removing Draft Fees
There isn’t much of a secret to having these fees removed. I called my lender and asked. I explained that is was “just silly that I would pay them, so that I could pay them”. The helpful representative told me he’d find out if he could remove the fee, and he did. The point is, it’s important to ask.
If this approach doesn’t work for you, there is another option. These fees are assessed because the lender initiates the automatic withdrawal. If you start the transaction, you often avoid any fees. You can mail in a check or make a “one-time payment” online according to your own payment schedule. This option takes more discipline but isn’t it worthwhile to save $1,440?
What do you think? What fees have you avoided by asking?
Image courtesy of zzzack
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2 Responses to Eliminate Automatic Draft Fees
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September 14th, 2009 5:42 pm
Thanks so much for this information. Most of the people probably dont even realize how 6$ adds up in the end of the year….
September 14th, 2009 8:53 pm
Hey E – I also wanted to add that instead of having the lender initiate the auto-payment, most banks offer free electronic bill pay from their web sites (it saves them on check processing) – they’ll mail the check for you on the schedule you set up…
I like your solution better, but if the lender is insistent on the fees, that’s a good alternative. Nice post.