Bank Fees Be Gone: Ways to Keep Your Earn-Earned Money
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Whether you open a savings account or a checking account, the one thing that can be really annoying is the fees associated with the same. Several banks and credit unions charge fees for providing different services and they can translate into a big amount at the end of each month. But, there is a way out.
Bank fees can be frustrating, but there are several steps you can take to minimize their impact. If you take the right steps, you can save money and avoid paying any fees to your bank or credit union.
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What are bank fees?
Bank fees are various charges imposed by financial institutions on their customers for accessing and managing their services. These fees can encompass a range of activities, from the routine maintenance of an account, transactions that exceed the account's available balance, using an ATM outside the bank's network, to executing wire transfers, both domestically and internationally.
Banks also levy fees for specific services like issuing a replacement for a lost or stolen card, handling foreign transactions, and even for closing an account within a certain timeframe after opening it. These fees are disclosed to customers through a Schedule of Fees or Fee Schedule, highlighting the importance of understanding and managing these costs to maintain a healthy financial relationship with one's bank.
Most common bank fees and ways to avoid them
Common bank charges can vary depending on the bank and the type of account you have, but some of the most common ones include:
Monthly maintenance fee
This fee is charged monthly for maintaining your account, though it's often waived if you meet certain requirements, such as maintaining a minimum balance or having direct deposits. The average account maintenance fee for a basic checking account can range from $5 to $15 monthly, though some accounts may have higher fees, particularly if they offer additional features or benefits. Several banks offer zero monthly maintenance fee accounts.
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Ways to avoid it
You can often avoid the monthly maintenance fee by meeting certain requirements set by the bank. These requirements can vary but commonly include:
- Maintaining a minimum balance. Many banks waive the monthly fee if you keep your account balance above a certain threshold. This threshold can vary widely depending on the bank and the type of account.
- Setting up direct deposit. Some banks waive the fee if you have a certain amount of money directly deposited into your account each month, typically from an employer or government benefits.
- Making a certain number of transactions. Some accounts waive the fee if you make a minimum number of transactions each month, such as debit card purchases or bill payments.
- Qualifying for special programs. Certain accounts may offer fee waivers for students, seniors, or customers who also have other accounts or loans with the bank.
- Electronic statements. Opting for electronic statements instead of paper statements may sometimes waive the monthly fee.
It's essential to carefully review the terms and conditions of your account to understand what requirements you need to meet to avoid the monthly maintenance fee. If you're unsure, you can always contact your bank for clarification.
Overdraft fee
An overdraft fee is charged when you spend more money than you have available in your account, resulting in a negative balance. The average overdraft fee typically ranges from $30 to $35 per transaction, though this can vary depending on the bank and the type of account you have. Some banks may also charge additional fees if the negative balance is not corrected within a certain timeframe.
Ways to avoid it
To avoid overdraft fees, you can take several precautions:
- Monitor your account balance. Keep track of your account balance regularly to ensure you have enough funds to cover your expenses.
- Set up low balance alerts. Many banks offer the option to receive notifications when your account balance falls below a certain threshold. This can help you avoid overdrawing your account unintentionally.
- Opt out of overdraft protection. Some banks offer overdraft protection services that automatically transfer funds from another linked account or line of credit to cover overdrafts. However, these services often come with fees of their own. You can choose to opt out of overdraft protection to avoid these fees altogether.
- Link your accounts. Linking your checking account to a savings account or a line of credit can provide a backup source of funds to cover overdrafts. While there may still be fees associated with transferring funds, they are typically lower than overdraft fees.
- Keep a buffer in your account. Maintaining a buffer of funds in your checking account can help prevent accidental overdrafts. Aim to keep enough money in your account to cover your regular expenses and any unexpected costs.
- Consider overdraft protection alternatives. Some banks offer alternatives to traditional overdraft fees, such as overdraft lines of credit or cash reserve accounts. These options may have lower fees or more flexible repayment terms than standard overdraft fees.
ATM fees
These can include fees charged by your own bank for using an ATM outside of their network, as well as fees charged by the ATM owner. Average ATM fees can vary depending on the ATM operator, your bank, and whether the ATM is in-network or out-of-network. Here are some typical fees:
- Out-of-network ATM fee. This fee is charged by your bank when you use an ATM that is not in your bank's network. It can range from $2 to $3 or more per transaction.
- Surcharge fee. This fee is charged by the ATM owner/operator when you use an ATM that is not part of your bank's network. Surcharge fees can vary widely but are typically around $2 to $3 per transaction.
Ways to avoid it
To avoid ATM fees, consider the following strategies:
- Use in-network ATMs. Stick to ATMs that are part of your bank's network to avoid out-of-network ATM fees. Many banks have ATM locators on their websites or mobile apps to help you find nearby in-network ATMs.
- Get cash back. Instead of using an ATM, consider getting cash back when making purchases with your debit card at participating retailers. This allows you to withdraw cash without incurring ATM fees.
- Use your bank's mobile app. Many banks offer mobile apps that allow you to deposit checks, transfer funds, and even allow ATM withdrawals without a physical card. Look for ATMs that support cardless withdrawals through your bank's app to avoid ATM fees.
- Consider fee reimbursement programs. Some banks offer fee reimbursement programs where they will refund a certain amount of out-of-network ATM fees each month. Check with your bank to see if they offer this feature.
- Withdraw larger amounts less frequently. To minimize the impact of ATM fees, withdraw larger amounts of cash less frequently rather than making multiple small withdrawals.
- Switch to a bank with a large ATM network. If you frequently need to use ATMs, consider switching to a bank that has a large ATM network or offers fee-free ATM access.
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Minimum balance fee
If your account balance falls below a certain threshold, you may be charged a fee. The average minimum balance account fees typically range from $5 to $15 per month, though it can vary depending on the bank and the type of account you have.
Ways to avoid it
To avoid minimum balance fees, you can take several steps:
- Maintain the minimum balance. The most straightforward way to avoid minimum balance fees is to ensure that your account balance stays above the required minimum at all times. Before you open an account, check with your bank to find out what the minimum balance requirement is for your account.
- Switch to a different account. If maintaining the minimum balance is difficult, consider switching to a different type of account that either has a lower minimum balance requirement or no minimum balance requirement at all.
- Link accounts. Some banks offer the option to link multiple accounts together to meet the minimum balance requirement. For example, you might be able to link your checking and high-yield savings accounts so that the combined balance of both accounts satisfies the minimum balance requirement.
- Set up direct deposit. Some banks waive the minimum balance fee if you have a certain amount of money directly deposited into your account each month. Check with your bank to see if they offer this option and what the requirements are.
- Negotiate with your bank. If you have a long-standing relationship with your bank or if you're a valued customer, you may be able to negotiate to have the minimum balance fee waived or reduced. It never hurts to ask!
- Shop around for accounts with no minimum balance requirements. Some banks and credit unions offer accounts with no minimum balance requirements at all. Consider shopping around to see if you can find an account that better fits your needs.
Returned deposit fee
Charged if a check you deposit is returned unpaid due to lack of funds. The average nonsufficient funds fee typically ranges from $10 to $25, though it can vary depending on the bank and the reason for the returned deposit.
Ways to avoid it
To avoid returned deposit fees, follow these guidelines:
- Ensure sufficient funds: Before depositing a check, ensure that you have enough funds in your account to cover it. If you're unsure about the availability of funds, consider waiting until you're certain or verify with your bank.
- Verify the check: Before depositing a check, verify that it's legitimate and from a trusted source. Checks from unfamiliar or questionable sources could bounce, resulting in returned deposit fees.
- Consider alternative payment methods: If possible, consider alternative payment methods such as electronic transfers or cashier's checks, especially for large transactions or payments from unknown sources.
- Opt for electronic deposits: Direct deposits, electronic transfers, and mobile check deposits are typically processed faster and have lower chances of being returned compared to traditional paper checks.
- Communicate with payees: If you're expecting a check from someone, communicate with them to ensure that they have sufficient funds to cover the payment. This can help prevent bounced checks and returned deposit fees.
- Maintain a buffer: Keep a buffer of funds in your account to cover unexpected expenses or fluctuations in your balance. This can help prevent overdrafts and returned deposit fees.
Excess transaction fee
Some accounts have limits on the number of transactions you can make each month, and if you exceed this limit, you may be charged a fee for each additional transaction.
The average excess transaction fee typically ranges from $5 to $15 per transaction. Excess transaction fees are charged when you exceed the maximum number of transactions allowed for your account within a specified period, such as a month.
Ways to avoid it
To avoid excess transaction fees, consider the following strategies:
- Know your account limits. Familiarize yourself with the transaction limits of your account, including the maximum number of withdrawals or transfers allowed per month. This information is usually provided in your account terms and conditions.
- Monitor your transactions. Keep track of your transactions throughout the month to ensure that you stay within the allowed limits. Many banks offer online banking or mobile apps that allow you to easily monitor your account activity.
- Consolidate transactions. Instead of making frequent small transactions, consider consolidating multiple transactions into a single transaction whenever possible. For example, rather than making several small transfers, combine them into one larger transfer.
- Use alternative payment methods. Consider using alternative payment methods, such as electronic transfers or bill pay services, which may not count towards your transaction limit. Check with your bank to confirm which transactions are included in the limit.
- Upgrade your account. If you frequently exceed the transaction limits of your current account, consider upgrading to an account with higher transaction limits or no transaction limits at all. Keep in mind that upgraded accounts may have higher fees or minimum balance requirements.
- Plan your transactions. Plan ahead and schedule your transactions strategically to ensure that you stay within the allowed limits. This can help you avoid excess transaction fees and maintain control over your account activity.
Wire transfer fee
Charged for sending or receiving money via wire transfer. The average wire transfer fee can vary widely depending on factors such as the bank, the destination of the transfer, and whether it's a domestic or international transfer. However, domestic wire transfer fees typically range from $20 to $30, while international wire transfer fees can be higher, often ranging from $30 to $50 or more. Additionally, intermediary banks involved in international transfers may also charge fees, which can further increase the total cost.
Ways to avoid it
To avoid wire transfer fees or minimize them, consider the following options:
- Select alternative transfer methods. If possible, consider alternative transfer methods that may have lower or no fees, such as electronic funds transfers (EFTs), peer-to-peer payment services, or mobile payment apps. These options may be suitable for transferring funds domestically or for smaller transactions.
- Use online banking. Many banks offer online banking platforms that allow you to initiate wire transfers online. Some banks may offer discounted or waived fees for wire transfers initiated through their online banking platforms.
- Check for fee waivers. Some banks may waive wire transfer fees for certain types of accounts or customers who meet specific criteria, such as maintaining a minimum account balance or having a premium banking relationship.
- Negotiate with your bank. If you're a valued customer or have a longstanding relationship with your bank, you may be able to negotiate lower wire transfer fees or have them waived altogether.
- Bundle transfers. If you need to make multiple wire transfers, consider bundling them into a single transfer whenever possible to reduce the number of fees incurred.
- Explore transfer services. Third-party transfer services, such as TransferWise or PayPal, may offer competitive rates and lower fees for international transfers compared to traditional banks. However, be sure to compare the total cost, service fees and exchange rates, before choosing a transfer service.
Paper statement fee
Some banks charge a fee if you choose to receive paper statements. The average paper statement fee can range from $1 to $5 per statement, though some banks may charge higher fees. This fee is typically charged when customers opt to receive paper statements through the mail instead of electronic statements delivered electronically.
Ways to avoid it
- Switch to electronic statements. Opt for electronic statements delivered via email or accessible through your online banking account. Electronic statements are often provided free of charge and can be accessed anytime, anywhere, without the need for physical mail delivery.
- Enroll in online banking. Register for online banking and set up electronic statement delivery preferences. Most banks offer online banking platforms where you can securely access your account information, view statements, and manage transactions online.
- Check for fee waivers. Some banks may waive paper statement fees for certain types of accounts or customers who meet specific criteria, such as maintaining a minimum account balance or enrolling in direct deposit. Check with your bank to see if you qualify for any fee waivers.
- Consolidate accounts. If you have multiple accounts with the same bank, consider consolidating them into a single account to reduce the number of paper statements you receive and potentially eliminate paper statement fees.
- Opt for paperless billing. If you have other accounts or services that still require paper statements, such as credit cards or utility bills, consider opting for paperless billing to reduce the overall amount of physical mail you receive and associated fees.
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FAQs
What can I do to avoid paying monthly maintenance fees on my bank account?
Many banks waive monthly maintenance fees if you meet certain conditions such as maintaining a minimum balance, making a set number of transactions each month, or setting up direct deposits. Review your bank's policy to see what options are available.
How can I avoid overdraft fees?
You can opt out of overdraft protection, which means transactions that would overdraw your account are simply declined. Alternatively, keeping a close eye on your balance and setting up alerts to notify you when your balance is low can help avoid overdraft situations.
Are ATM fees charged by all banks?
Most banks charge fees for using ATMs outside their network, but some offer fee rebates or belong to ATM networks that allow free withdrawals. Checking your bank's ATM policies and planning withdrawals can help avoid these fees.
Why am I charged a foreign transaction fee, and how can I avoid it?
Foreign transaction fees are charged for transactions made in a foreign currency or processed through a foreign bank. To avoid these fees, you can use a credit or debit card that does not charge foreign transaction fees when traveling or making purchases in another currency.
Can I negotiate bank fees or have them waived?
Yes, in many cases, if you're a good customer and don't frequently incur fees, your bank may be willing to waive a fee as a one-time courtesy. It's always worth asking, especially if the fee was the result of an unusual situation.
The bottom line
By being proactive, informed, and strategic with your banking habits, you can effectively minimize and even avoid many common bank fees, ultimately saving money and maximizing the value of your banking experience. There are several banks that offer no-fee checking and savings account, all you need to do is look around and make the right choice. If your choice of bank charges certain fees, negotiate with them and if possible, you could have them waived.
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