Key takeaways
- Banks come with an array of fees but it is possible to avoid them. Learn your bank’s fee structure to be prepared.
- Traditional banks charge a lot of fees. Many online-only banks are less costly and do not charge minimum balance fees, monthly maintenance fees, or overdraft fees.
- Many fees are avoidable. You can avoid ATM fees by only using ones in your bank’s network and paper statement fees by choosing electronic statements.
Banks offer a wide range of financial services, but they also come with an array of fees that can chip away at your hard-earned money. If you’re not careful, you may start wondering if it’s worth the convenience. The good news is, that most bank fees can be avoided entirely with a little strategic planning.
Here’s a rundown of 10 common bank fees and tips on how to steer clear of them.
1. Minimum Balance Fee
A lot of banks require a minimum balance in your account. If your balance drops below this amount, they will charge you. The average fee is $5 but it can go as high as $25 or more. Do your research and choose a bank that either has a low minimum balance requirement or none at all. A lot of online banks get rid of the minimum balance fee entirely.
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2. Monthly Maintenance Fee
A bank is a business and so many will charge you a monthly maintenance fee to keep the bank running. This fee ranges from $4 to $15 or more per month. Some banks will waive this fee if you set up direct deposits, maintain a certain balance, or meet other specified requirements. Alternatively, search for banks that offer no-fee accounts.
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3. Excess Transaction Fees
Banks typically limit the amount of transactions you can make with your savings and money market accounts to six per month. More transactions might result in a fee of $10. Some banks waive the fee if you meet certain requirements. Be aware of transaction limits and track your activity. If necessary, transfer funds to a checking account for more frequent transactions.
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4. Overdraft Fee
If you spend more than is available in your account you’ll be charged an overdraft fee. These fees can be expensive with the average being $26 per transaction. If you don’t realize that you’ve overdrawn and make multiple purchases, you could easily pay $100 a day in overdraft fees. Some banks make it worse and charge continuous overdraft fees or daily overdraft fees for each day the account is overdrawn. To avoid these charges, keep a close eye on your balance and set up account alerts for low balances. If you can, link your checking account to your savings account or line of credit to serve as a backup any time you overdraw.
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5. Insufficient Funds Fee
An insufficient funds fee is similar to an overdraft fee, but this one is charged when a check or automated payment bounces due to insufficient funds. Banks charge a little bit less – $20 on average. Again, keep an eye on your balance and make sure there’s enough money in your account to cover scheduled payments.
7. Out-of-Network ATM Fees
Lots of banks have networks of ATMs for their customers to use free of charge. If you choose an out-of-network ATM, you’ll likely pay a fee of around $5. Try to find ATMs that are part of your bank’s network. Or choose a bank that refunds these fees.
6. Early Account Closing Fees
If you close your account within only months of opening it your bank may charge you. The fee ranges from $5 to $50 depending on the bank. Before opening an account, be sure that you need it and will use it.
8. Inactivity Fees
If you don’t use your account for an extended period of time, your bank may charge you to keep it open. The fee ranges from $5 to $20 per month as does how long it takes for a bank to consider you inactive. Some banks will wait a year before they charge you. Even if you don’t use an account regularly, schedule a small transaction periodically to keep it active. If you no longer need the account, consider closing it.
9. Paper Statements
Remember paper statements? In our digital age, they are quickly becoming a thing of the past. Most banks want you to choose electronic statements and will charge you $1 to $5 to send paper. Electronic statements are usually free and better for the environment anyway.
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10. Card Replacement Fees
Try not to lose your debit card. Besides the inconvenience and fear of someone using it, your bank may charge you. Always keep your card in a safe place. If you’re the type of person who misplaces things often, look for a bank that offers free replacements. There are plenty of banks out there that don’t charge a fee to replace your card if it is lost, stolen, or damaged. But most banks will charge a fee for rushed or expedited card replacements.
Final Thoughts
Being proactive and understanding your bank’s fee structure can save you money. Regularly review your account statements for any unexpected charges and don’t hesitate to ask your bank about any fees you don’t understand. Your money is hard-earned; don’t let pesky bank fees take more of it than necessary!