Keeping your money in a bank account can be expensive if you're not mindful of common bank fees.
However, there's a way to avoid paying most of these fees. The first step is to be aware of what the fees are. The next step is to be proactive about avoiding these fees or choosing the best bank to fit your goals.
1. Monthly service fees
Some banks, particularly brick-and-mortar institutions, charge monthly maintenance fees on accounts. These are fees you'll pay every month, and the bank usually automatically withdraws the money from your account.
The fee could be as little as $5. Sometimes banks charge higher fees on bank accounts that pay higher rates or come with more perks.
With some banks, monthly service fees are non-negotiable. Others won't make you pay if you meet certain criteria. Maybe the bank will waive your monthly fee if you make at least 10 debit card transactions per month, for example, or if you maintain a minimum $500 daily balance.
How to avoid monthly service fees
Check what the requirements are to waive them. If you pay a fee every month unless you keep a $500 balance, try to keep at least $500 in your account at all times. The rules should be listed on the bank's website, or you can call to speak with a customer service representative.
Another option is to choose a bank that simply doesn't charge monthly service fees. For example, many online banks and credit unions do not charge monthly fees on bank accounts, so you don't have to worry about meeting the requirements each month.
2. Overdraft fees
Most banks charge you a fee if your checking account balance goes below zero dollars.
A bank imposes overdraft fees if a purchase would overdraw your account, and the company covers your overdraft so the transaction goes through. This is typically the process when you swipe your debit card but don't have enough money in your checking account to cover the purchase.
Overdraft fees vary by bank, but they usually range from $10 to $38 each time you overdraw.
Banks also have a limit on how many times you can be charged each day. Maybe you don't realize you've overdrawn your account, so you swipe your debit card three times in one day. You could end up paying around $100 in overdraft fees that day.
How to avoid overdraft fees
Your bank should have an overdraft protection option, but you'll likely have to set it up yourself rather than be enrolled automatically.
With overdraft protection, you typically link your checking account to a savings account. If you overdraw, money moves from savings into your checking account so your balance stays above zero.
Other banks have an overdraft line of credit option. When you overdraw, you automatically borrow money from a line of credit. You'll have to pay the money back, sometimes with interest. It's a similar setup as a credit card.
You might find banks that offer several ways to minimize overdraft charges. If that's the case, you can select overdraft protection that's the most suitable for your needs.
The best banks for avoiding overdraft fees have eliminated these fees entirely. If a purchase would overdraw your account, the bank denies the transaction.
3. Overdraft protection fees
Yes, you can use overdraft protection to avoid paying an overdraft fee. But some large banks charge a smaller fee for tapping into overdraft protection.
How to avoid overdraft protection fees
The easiest way to avoid paying overdraft protection fees is to make sure your balance never drops below zero. You can track your balance online or via the bank's mobile app. Ask your bank about balance alerts, which are text messages or emails sent to you if your balance hits a certain dollar amount to let you know you're close to overdrawing.
You can also choose a bank that doesn't charge overdraft protection fees. There are plenty of institutions with free overdraft protection services, including Chase Bank, Capital One Bank, and Varo Bank.
4. Non-sufficient funds fees
You'll pay a non-sufficient funds (NSF) fee if a purchase overdraws your account, and the bank denies your transaction.
A bank charges an NSF fee when a check bounces or you don't have enough money in your account to cover an electronic payment. The fee amount and daily limits are usually the same as the bank's overdraft policy.
How to avoid NSF fees
Because these fees are similar to overdraft fees, enrolling in overdraft protection could help you out. You may also bank with a company that doesn't charge overdraft or NSF fees.
5. Out-of-network ATM fees
Banks typically have ATM networks. Use an in-network ATM to check your balance or withdraw money for free.
A bank may charge you for using an ATM outside of its network, usually $2 or $3 each time. Additionally, the ATM provider will probably charge you a few more dollars.
How to avoid out-of-network ATM fees
Avoid ATM fees by choosing a bank that has a large ATM network and has a machine close to your home or office.
You could bank with an institution that doesn't charge out-of-network fees. Some banks will also reimburse you if an ATM provider charges you.
6. Foreign transaction fees
A foreign transaction fee is a charge for using your debit card outside the U.S.
There are two main types of foreign transaction fees: one for buying something with your debit card and one for using an ATM abroad.
Debit card issuers Visa and Mastercard both charge a 1% foreign transaction fee. Many institutions require you to cover this fee, and some charge an extra percentage on top of that.
For an ATM transaction, some banks charge the fee they'd normally impose for using an out-of-network ATM fee on top of the normal percentage they charge for foreign transactions.
How to avoid foreign transaction fees
Foreign transaction fees are typically unavoidable if you want to use your debit card abroad. But to pay less in foreign transaction fees, you can withdraw more money at once so you don't have to return to the ATM later — just consider whether you feel safe carrying a large amount of cash.
7. Excess transaction fees
You might pay a fee to take money out of a savings account. The federal rule Regulation D states there are transfer limits for savings accounts. Banks may choose to suspend the monthly transfer limit so customers can make unlimited monthly transactions — or they could enforce a six-per-month limit.
Many banks charge a fee if you make more than six monthly transfers, usually around $10 per transaction.
How to avoid excess transaction fees
As of April 2020, banks are no longer legally required to penalize you for exceeding six monthly transactions. Some banks have waived their fees altogether. Others have increased the number of times you can withdraw. Check with your bank about its excess transaction policy.
If you bank with a financial institution that enforces the monthly transaction limit, you may want to keep more money in your checking account as a buffer so you don't constantly need to use money from savings.
8. Wire transfer fees
A wire transfer is a tool for moving money electronically from your bank to a friend or family member's bank. It can be especially useful if you don't have access to the recipient's bank. For instance, maybe you bank with a national bank but your friend banks with a local institution across the country.
You can send wire transfers within the U.S. or internationally, and international transfer fees are more expensive. You can expect to spend $10 to $50 per wire transfer.
How to avoid wire transfer fees
There are multiple ways to deposit money into someone else's account. Find out if there's a more affordable way to send money to a friend or family member.
You could send money electronically through an app like Venmo or Zelle. Or if you have easy access to the person's bank, walk in and ask to deposit cash or a check into their account. You will need their bank account information, though.
9. Paper statement fees
Most banks provide you with digital bank statements for free. Each month, you can log into your online account and check your most recent statement.
If you want paper statements mailed to your home, you'll probably pay a fee of around $3 per month.
How to avoid paper statement fees
The only way to get out of this fee is to stop receiving paper statements.
Not sure if you're enrolled in paper bank statements? Check your online account settings. Opting out of paper statements — and into electronic statements — is usually as simple as checking a box.
10. Lost debit card fees
Some banks charge you for ordering a replacement if your debit card is lost or stolen, and you might pay extra if you need express delivery. You could end up paying between $5 and $30 to get a new card.
How to avoid lost debit card fees
The good news is that not every bank charges a fee for replacing your card, so if you've lost your debit card, don't freak out just yet. Some will only charge you for a rush order.
Otherwise, the best way to avoid this fee is just to hang onto your debit card. (If you tend to lose things, this is easier said than done!) It could be helpful to buy a wallet or purse to keep all your important items in one place.
11. Inactivity fees
Banks may charge a monthly inactivity fee if you don't use your account for six months or more. You could pay up to $20 per month, which is a lot for a bank account you aren't even using.
How to avoid inactivity fees
Regularly log into each of your bank accounts to review transactions. If you aren't using a bank account anymore, consider closing it and moving all the money to a new account you'll actually utilize.
Do you have a reason for wanting to keep this account open, even though you don't tap into it much? To avoid an inactivity fee, make an occasional purchase with your debit card so the account stays active.
12. Account closing fees
You won't always pay a fee for closing your bank account. But you may be charged for closing it within, say, three to six months of opening it. These fees are typically around $25.
How to avoid account closing fees
First, ask yourself how long you expect to use a bank account before opening it. If you plan to open a bank account to receive a cash bonus, then close it immediately, it could backfire.
If you're considering closing an existing account, look up your bank's closing fee policy online. You may find out you only need to keep the account open for another month or two to avoid paying a fee.
You may decide it's still worth it to close your account early, though. For instance, if you're paying a $25 monthly service fee, it would be financially prudent to pay $25 once to close your account a few months early.
There are multiple ways to cut down on common banking fees. But the easiest way is probably to work with a bank that charges low fees overall — especially monthly service, ATM, and foreign transaction fees.
13. Stop payment fees
A stop payment is a request to your financial institution to cancel an electronic payment or check before it has been processed. You may need to do this if you discover an error on a check or a check has been lost or stolen.
Canceling a check or ACH transfer can be done online in most cases. Fees can vary at each institution, often ranging from $0 to $35. Your financial institution's Schedule of Fees form can usually be found online and in your initial banking agreement.
How to avoid stop payment fees
Carefully review the details of every check you write and electronic payment you set up. If you need to double-check the payee's account or address information, and the amount, to confirm everything is correct.
14. Check fees
Most banks and credit unions give customers a checkbook when they open a new checking account. If you run out, you may have to pay to order new checks if you have a basic account. Prices vary by institution — Chase, for example, charges $30 per book of 80 personal checks.
Another type of check fee you may encounter is a check-cashing fee. This is charged when a non-customer cashes a check at a bank or credit union. It can range from $5 to $10 per check.
How to avoid check fees
New checks are often included as a perk in many premium checking accounts. If you don't have that perk, typically the safest place to order your checks is through your bank or credit union, but the costs can be high.
Costco and Walmart can usually print checks for you at a lower cost than your bank, as can online retailers like Checks in the Mail and Carousel Checks. Review this list of authorized check-printing companies before placing your order.
To avoid check-cashing fees all together, cash your check online or in person with your personal bank or credit union.
Negotiating fees with your bank
If you're set on finding a new bank account with no fees, focus your search on online banks and credit unions.
If you enjoy your current financial institution, there are strategies for fee-fee banking. For example, you may consider negotiating your fees if your account is in good standing (i.e. you don't owe any overdraft or NSF fees and your balance is above $0). Call the bank so you can lay out your case to a customer service agent.
Start by asking if the bank will waive or lower your monthly fee if you keep a certain balance or make a certain number of transactions. If they don't budge, tell them you're considering switching to a competitor. Sometimes, the threat of losing a customer will prompt a bank to be more lenient.
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FAQs
How can setting up alerts help me avoid fees?
Alerts notify you of a low balance, upcoming bill, or a large transaction so that you can avoid overdrafting your account. Since checking accounts are primarily used for spending, alerts can ensure maintain your account balance — minimizing overdraft fees in the process.
Is it possible to negotiate fees with banks?
Customers who have a longstanding relationship with a bank or have no previous offenses may be able to lower certain fees or have them waived. Fee waivers and banking negotiations may not always be possible in every situation, though.
Are online banks a good alternative to avoid fees?
Yes, online banks have a reputation for lower fees than brick-and-mortar banks. They often also offer higher interest rates on deposits, in part because they don't have costs associated with maintaining branch locations.
Editorial Note: Any opinions, analyses, reviews, or recommendations expressed in this article are the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any card issuer. Read our editorial standards.
Please note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed, or may no longer be available.
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