How to save money on your bank account

You don't usually think of a bank account as an item on which you're required to spend money, because it's traditionally a vehicle that helps you spend on other goods and services.  But if you check your bank outlay and separate fees due the bank as opposed to debits for other purposes, odds are you'll be unpleasantly surprised at how much money the bank charges usurp that would be better spent elsewhere.

Pay less to keep your account open

Here are some tips to minimise the cash you spend to keep a bank account.

---Scrutinise your packaged account.  Did you open a packaged (or bundled) bank account?  Because if so, you're probably paying for services you don't need.  The major expense sold with a bank account is usually insurance of various kinds (mobile, travel, breakdown, home, and so on).  Add up your monthly insurance fees for 12 months and compare them to standard policy rates to see whether the convenience of paying for them in one bill is good value for the money.

Even if the policies are priced properly, think about whether you need them, basing the answer on usage.  Bank salespersons have an appalling habit of selling you anything you'll agree to buy, even if the product is inappropriate for your lifestyle and you can't make a claim under the type of policy sold to you.

---Insurance refunds.  If you bought insurance that won't help you, force the bank to refund the fees.  Fortunately, the Financial Conduct Authority is cracking down on banks that sell packaged accounts with useless insurance, forcing banks to refund for reasons like upgrading the account without asking the customer or failing to disclose terms clearly.

One bank (Santander) has already voluntarily ended its packaged account program and moved those customers onto fee-free alternatives, which are highly recommended for savings.  The free Financial Ombudsman tells you how to complain to your bank, and if the bank won't resolve your problem you can then place a complaint directly with the Ombudsman.

---Extra insurance for the same price.  To maximise the value of a packaged account, add one or more account holders, who will also be insured at no extra charge.  That's a method of making the packaged account's insurance buy a good deal for you instead of the bank.

---Get paid for a credit balance.  Try to find a bank account that pays you to keep a credit balance.  Some banks pay a sign-up bonus when you open the account and others pay you a bit every month you manage to keep money in the account, and you're free to move your money around to take advantage of multiple offers.

---Thrifty overdrafts.  Sometimes overdrafts are a way of life, and if you experience a temporary mismatch between income and spending, an authorised overdraft arrangement can help you meet demands.  The authorised overdraft lets you continue to draw on your account even if there's no money on deposit, and the bank charges you interest on this short-term loan. Parrot Casino is an alternative method of gaining access to additional funds.

If you need that kind of overdraft protection, compare the arrangements offered by different banks to see which will benefit you most.  There's a page showing a sample comparison here.

The authorised overdraft is the cheapest way of handling a cash flow issue, and the most expensive way is to keep generating debits without the bank's permission.  That is called an unauthorised overdraft, and in that case the bank generally refuses to honour the debits, meaning checks bounce, automatic payments are not made, and your creditors begin to call you.

---Eliminate unnecessary debits.  Examine all the charges that are automatically debited from your account to pay various merchants.  You may find you're paying for services you no longer use, and you have the authority to terminate the payments unilaterally.