How to Avoid Common Banking Fees

Many of the fees that banks and credit unions charge for using their checking and savings accounts can be avoided.

What are bank fees, and what causes them to arise?

Any fees your bank imposes for using its goods and services are referred to as bank fees. For example, your bank might charge an ATM fee when you take out cash from a machine outside of its network, an overdraft fee when your balance falls below zero, and a monthly service fee to keep your checking account open.

Based on a survey conducted by Bankrate in 2023 regarding checking and ATM fees, 25% of Americans pay an average of $24 per month for banking fees. For banks and credit unions, these fees cover operating expenses and bring in revenue. When compared to brick-and-mortar institutions, online banks usually have lower overhead costs, which they may pass along to customers in the form of lower fees.

But, all of the fees you pay will mount up over time and could end up costing thousands of dollars. Thus, it’s a good idea to be aware of banking fees and avoid clear of them whenever you can. Spend some time comparing different accounts and reviewing fee schedules when you’re looking for a new savings or checking account. Think about how you usually bank and whether you will probably pay any of the fees. Select the account that charges the least and provides services you’ll use.

Common banking fees and strategies for avoiding them

There’s usually an option to avoid paying any banking fees.

Monthly maintenance fee

The fees for keeping up your savings or checking account are paid for each month. They differ for every bank and account type but typically run between $5 and $15 per month.

Many banks will waive the charge if you fulfill specific criteria. For example, if you set up direct deposit or maintain a minimum balance in your account, some institutions won’t charge you the fee. Furthermore, depending on your balance, some banks and credit unions don’t charge the fee at all.

Out-of-network ATM fee

Generally, you can use the network of ATMs that banks and credit unions offer for free. However, you might have to pay fees from your bank as well as the ATM provider if you go outside the network. Based on a survey conducted by Bankrate, the average cost of these fees will be $4.73.

Locate an in-network ATM nearby using the website or mobile app for your bank to avoid paying this type of fee. An alternative would be to use a cash-back debit card at a store that accepts them.

Overdraft fee

Additionally, banks have the right to charge you if you overspend and end up with a negative balance in your checking account. According to the Consumer Financial Protection Bureau, up to $35 is spent by each of the 23 million Americans who pay this fee annually. However, there are a few workarounds:

Nonsufficient funds (NSF) fee

When the bank rejects a transaction because there isn’t enough money in your account to cover it, you are penalized with an insufficient (or insufficient) funds fee. Each incident could cost about $20 for the fee. By closely monitoring your balance or subscribing to low-balance alerts, you can prevent NSF fees.

Stop-payment fee

Certain financial institutions allow you to cancel a paper check or an electronic money transfer before they process it. Requests to halt payments, however, might incur costs. While this varies depending on the bank, each request usually costs between $30 and $35. In certain situations, switching to a different payment method will spare you the fee and preserve your ability to stop payments. For example, certain banks don’t impose a stop-payment fee on bill-pay and debit card transactions.

Check-ordering fee

A free booklet of checks may be given to you by your bank when you open a checking account. But once you’ve used up the initial supply, you’ll typically have to pay for any additional checks. The most costly option is typically to order them from your bank, which costs about 30 cents per check. By ordering checks from a third-party service or selecting a bank that offers free checks on a regular basis, you can cut this expense.

Inactivity fee

Should several months pass without any activity from your savings or checking account, your bank might charge you an inactivity fee on your next statement. Often referred to as a dormancy fee, it typically becomes active after six months without any new transactions. This type of fee, if assessed by your bank, may cost anywhere from $5 to $20.

By consistently using the account, you can avoid paying this fee. If it’s not your primary account, you might want to think about making a regular deposit or withdrawal.

Wire transfer fee

Money can be transferred instantly between bank accounts via a wire transfer, but it is not free. A few different factors determine the fee you pay, but generally speaking, it is about $25 for domestic transfers and $45 for international transfers.

By using an alternative payment method, such as a paper check, an ACH transfer, or a mobile payment app (like Venmo or Zelle), you might be able to avoid paying wire transfer fees.

Paper statement fees

Since e-statements are more affordable and private, financial institutions typically prefer to send you electronic statements. Your bank or credit union may charge you for printing and mailing a copy of your statement each month if you prefer to receive paper copies. You can prevent paper statement fees by signing up for the paperless option and logging into your account. Paper statement fees typically range from $2 to $5 each time you receive one.

Excessive transactions fee

A federal rule from the past limited customers to six “convenient transfers and withdrawals” per month. If you exceed the limit, the excessive transaction fee will be your responsibility. It is now up to banks and credit unions to decide whether and how much to set monthly limits on transfers and withdrawals. Typically, institutions that impose an excessive transaction fee charge anywhere from $3 to $25 for each transaction. By making regular withdrawals from your checking account, such as paying bills, you can avoid paying the fee.

Account closing fees

If you close an account within the first 90 to 180 days of opening it, some banks will charge you a fee. The purpose of these early closeout fees, which vary from $20 to $50, is to assist banks in keeping their current clientele while discouraging prospective customers from taking advantage of welcome bonuses and switching to another bank.

Opening an account at a bank or credit union that you intend to stick with in the long run will save you the fee.

Conclusion

There may be fees associated with checking and savings accounts, and these costs can mount up over time. Searching around for the greatest bank account that either waives fees upon meeting requirements or doesn’t charge any is the best way to avoid these costs. Because they have lower overhead, online banks usually charge lower fees.