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What’s an easy way to keep more money in your bank account? Avoid bank fees.
In 2021, consumers paid $7.7 billion in overdraft and non-sufficient funds fees. This doesn’t include other miscellaneous fees banks charge. Even $5 here and there might seem small but adds up.
Avoiding bank fees isn’t difficult to do. Here are 9 bank fees to look out for and how to avoid paying them.
9 Common Bank Fees and How to Avoid Them
1. Monthly Fee or Maintenance Fee
A monthly maintenance fee is a fee banks charge to offset their costs of providing services. Banks charge the fee automatically, withdrawing it from your account each month.
You’ll often see a maintenance fee on checking accounts (personal and business). However, some banks also charge maintenance fees on savings accounts. Read the fine print before signing up. Ask the bank if the account you want has a monthly maintenance fee.
On average, banks charge $5 – $15 per month as a maintenance fee. The cost varies by bank and what services they provide. Fortunately, there are ways to avoid paying a monthly fee.
How to Avoid Paying a Monthly Fee
The easiest way to avoid paying a monthly fee is to find a bank that doesn’t charge the fee. You can find several options in our list of the best checking accounts and in you’ll also find accounts that don’t charge a lot of other common fees.
If you don’t want to switch banks, you might be able to waive the monthly fee by doing one or more of the following:
- Meet the minimum average daily balance requirement
- Receive the minimum direct deposit amount required to waive the fee
- Have a combined balance in other accounts at the same bank that meets the bank’s requirements
Each bank has different requirements. Ask a bank representative and read the account disclosures before signing up for an account to see how you can waive account fees.
2. Overdraft or Insufficient Funds Fees
Spending more money than you have in your account is an overdraft, and banks charge for it. They don’t only charge once either. If you continue spending money you don’t have, banks can charge you an overdraft fee for every purchase.
Overdraft fees vary by bank, but on average, they cost $35 per overdraft. The fees continue until you bring your account balance up. However, there may be a limit on how much a bank will charge per day.
To bring your account current, you must add enough funds to cover the amount you overspent. Plus, the overdraft fees. If you don’t, the bank will withdraw the amount owed from your next deposit.
Even if you have overdraft protection, you may still pay a fee. An overdraft protection fee can charge you for transferring funds from another account, such as your savings account. Plus, overdraft protection only covers debit card one-time purchases and ATM transactions. Checks and recurring transactions may still go through, incurring overdraft charges.
How to Avoid Paying Overdraft Fees
Fortunately, it’s easy to avoid paying overdraft fees. It comes down to watching your budget and balancing your checking account regularly. You’ll also want to start using a budgeting app to keep track of your finances.
Many banks also allow you to set up low balance alerts, which let you know funds are low. Again, overdraft protection can still cost you money so be careful. The absolute best way to avoid incurring an NSF fee is to use a bank that does not charge overdraft fees.
3. ATM Fee
Most banks charge a fee to use the ATM if you use any outside their network. Fortunately, most banks have a large network. Still, if you don’t pay attention and use a non-network ATM, you could pay between $2.50 – $5 per transaction. Transactions include withdrawals, deposits, and even balance inquiries.
Some banks reimburse you for ATM fees up to a certain limit.
How to Avoid Paying ATM Fees
The easiest way to avoid paying ATM fees is to only use in-network ATMs. If your bank doesn’t have a large enough network, consider switching banks to have one with a larger ATM network. Better yet, find a bank that doesn’t charge any ATM fees or reimburses you for them, so you don’t have to worry about it.
TD Bank has a Beyond Checking Account that offers unlimited ATM fee reimbursements when you maintain a daily balance of at least $2,500 (which waives the monthly fee too). They also offer a limited-time $300 bonus for new customers so it’s a one-stop shop for saving and making money.
Other ways to avoid ATM fees include:
- Pay with a check instead of using cash
- Use a payment app like Zelle, Venmo, or the Cash App
4. Fee for Cashing a Bad Check
Cashing a bad check has many negative consequences. First, you’ll likely owe your bank a bad check fee to cover the cost of the bank returning the check. Next, if you spend the money, you might overdraft your account, resulting in overdraft fees.
Every bank charges different fees. But you could pay as much as $35 for cashing a bad check, even if you are not the one at fault.
How to Avoid Paying a Fee for Cashing a Bad Check
Avoiding a fee for cashing a bad check is easier than it seems. First, always make sure your checks are from a trusted source. If you aren’t sure, don’t accept a check – only cash.
No matter where the check is from, don’t spend the money until the check clears. You’ll see the difference when you log into your bank account. The deposit will show pending until the check clears. Wait until you know it’s cleared to spend the money to avoid more fees.
5. Wire Transfer Fee
A wire transfer is when you send money from one bank to another. It can be a costly way to send money, but it’s quick. It’s common during real estate transactions and sending money abroad.
You’ll typically pay to send and receive wired funds. Domestic outgoing wires can cost around $25. International outgoing wires can cost around $49. But they could cost more or less depending on the bank.
Your bank can also charge a small fee of around $15 to receive domestic and international wires.
How to Avoid Paying a Wire Transfer Fee
To avoid wire transfer fees, you typically need to find other ways to send the money. However, if you send wires often, consider opening an account that doesn’t charge for wires. For example, a Fidelity Cash Management account.
If you’re paying friends or family, you could use a payment app instead, such as PayPal, Cash App, Zelle, or Venmo.
If you still need to send a wire, use a service like Wise rather than your bank. You’ll save money on the fees and still get the service you need.
6. Foreign Transaction Fees
Foreign transaction fees are fees banks charge when you use your debit or credit card abroad. You might also pay a foreign transaction fee for purchasing from a foreign company, even if you’re in the United States.
Foreign transaction fees vary by bank, but they typically charge 1% – 3% of the total cost on average. If you aren’t sure if you’ll have to pay this fee, first find out where the company is from before you order. Then read the fine print on your credit card agreement.
How to Avoid Paying Foreign Transaction Fees
If you travel often, it pays to find a credit card that doesn’t charge foreign transaction fees. Here’s a list of our favorite travel credit cards, many with no foreign transaction fees. As a rule, all Capital One cards are foreign transaction fee-free, so they’re a good place to start.
If you use your debit card abroad often, consider opening a Chime account. Chime doesn’t charge foreign transaction fees or monthly account fees, for that matter. So you can spend how you want without worrying.
7. Paper Statement Fee
The paper statement fee is a sneaky fee many people don’t realize they’re paying. It’s a fee banks charge if you want a statement mailed to you each month. Or if you go into the bank and ask for a paper statement.
Banks can charge anywhere from $0 – $6 per month for paper statement fees. Plus extra fees if you order additional or archived statements.
How to Avoid Paying a Paper Statement Fee
To avoid paying a paper statement fee, opt out of paper statements with your bank. Some banks ask you to opt in if you want paper statements. Others automatically enroll you to receive paper statements unless you opt-out.
Instead of paper statements, you can receive them online. From there, you can either print them yourself or save them to your computer for access later.
You can also use an online bank that doesn’t offer paper statements. Here’s a list of our favorite online banks.
8. Inactivity Fee
Many banks charge inactivity fees or dormancy fees if you don’t use your account for an extended period. How long you can go without paying a fee varies by bank. Always read the fine print before you open an account.
Inactivity fees can start as soon as a couple of months. If you have an account you know you won’t use, you’re better off closing it to avoid the fees.
Each bank is different, but on average, banks charge $5 to $15 per month for inactivity.
How to Avoid Paying an Inactivity Fee
To avoid paying an inactivity fee, make it a habit to conduct at least one transaction each month. It’s best to set up an auto-transfer or direct deposit so you don’t forget. Or make sure you deposit or withdraw money at least once a month.
If you don’t need the account, close it and transfer your funds to a high yield savings account instead.
9. Early Account Closure Fee
Some banks have a minimum amount of time your account must be open. If you close the account before the required date, you might have to pay a fee. On average, banks charge $25 – $35 if you close your bank account early. When you open the account, a bank should disclose how long you must keep it open to avoid this charge.
How to Avoid Paying an Early Account Closure Fee
Always ask before opening a bank account if you must have the account for a certain amount of time. You should also do this if you open a bank account that pays a bonus, as most banks pay the bonus to keep your account open. If you can’t keep the account open for as long as they request, don’t open the account.
Frequently Asked Questions (FAQ)
Can banks change fee policies?
Banks can change fee policies after you open the account. However, they must inform you at least 30 days before the change and in writing to give you a chance to decide what to do.
What is the average bank fee?
Americans pay $7 a month in banking fees each month or $84 a year. Try not to do the math over a lifetime, it’s depressing.
How do you get bank fees waived?
Some banks will give you one honorary fee waiver if you ask. They usually do this if your account is in good standing, and you typically don’t get charged a fee. If you make a habit of it, though, chances are they won’t keep waiving the fee.
Final Thoughts
You don’t have to pay unnecessary bank fees. Know what your bank charges and for what, and do what you can to avoid it. If you find that you’re paying excessive fees, it’s time to get a new bank account. Changing banks isn’t as difficult as it might sound. And the time you spend changing your bank will be worth it when you see how much money you save.
