Bank fees are one of those pesky expenses that can add up quickly if you’re not careful. Whether you’re managing a savings account, checking account, or even a credit card, banks have a wide range of fees that you might not be fully aware of. From monthly maintenance fees to overdraft charges, these small costs can eat away at your hard-earned money over time. Understanding the most common types of bank fees—and how to avoid them—can help you keep more of your cash in your pocket.
In this complete breakdown, we’ll cover everything you need to know about the various fees that banks charge, why they exist, and what steps you can take to minimize or even eliminate them.
1. Monthly Maintenance Fees
One of the most common bank fees is the monthly maintenance fee. This is a flat charge that some banks apply just for maintaining your account. It typically ranges from $5 to $15 per month, which might not seem like much, but can add up to a significant amount over a year.
- How to Avoid It: Many banks offer ways to waive this fee. This may include maintaining a minimum balance, signing up for direct deposit, or enrolling in paperless statements. Check your bank’s policies and see if you qualify for any fee waivers.
2. Overdraft Fees
An overdraft fee occurs when you spend more money than you have in your account, causing your balance to go negative. Banks charge this fee to cover the cost of processing the transaction. Overdraft fees can be as high as $35 or more for each occurrence, which can quickly turn a small mistake into a costly one.
- How to Avoid It: You can avoid overdraft fees by opting out of overdraft protection, meaning your card will simply be declined if you don’t have enough funds. Alternatively, keep a close eye on your account balance, set up low-balance alerts, or link your checking account to a savings account for automatic transfers in case of overdrafts.
3. ATM Fees
ATM fees can come from two sources: your own bank and the bank that owns the ATM you’re using. Out-of-network ATM fees can range from $2 to $5 per transaction, which means that withdrawing cash while on the go can get expensive.
- How to Avoid It: Stick to ATMs within your bank’s network or use a bank that reimburses ATM fees. Some online banks, for example, refund ATM fees charged by other institutions.
4. Paper Statement Fees
Many banks are encouraging customers to go paperless by charging a paper statement fee, which is usually around $2 to $3 per statement. While it’s a relatively small charge, it’s an easy one to eliminate.
- How to Avoid It: Sign up for electronic statements. Not only will you avoid the fee, but you’ll also help reduce paper waste.
5. Foreign Transaction Fees
If you’re traveling abroad or making purchases from foreign merchants, you might encounter foreign transaction fees. This fee is usually around 1% to 3% of the total transaction and is applied when you use your debit or credit card outside of your home country.
- How to Avoid It: Consider using a card that doesn’t charge foreign transaction fees. Many travel-friendly credit cards and some online banks waive these fees for international transactions.
6. Early Account Closure Fees
Banks often charge an early account closure fee if you close an account within a few months of opening it. This fee can range from $25 to $50 and is meant to discourage customers from switching banks too frequently.
- How to Avoid It: If you’re opening an account to take advantage of a promotional offer, make sure you’re aware of how long you need to keep the account open to avoid this fee.
7. Wire Transfer Fees
If you need to send money to someone quickly, you might use a wire transfer, which is one of the fastest ways to move money. However, wire transfers can come with steep fees—ranging from $15 to $50 per transfer—especially for international transfers.
- How to Avoid It: Look for alternatives like ACH transfers or peer-to-peer payment apps (e.g., PayPal, Venmo) that offer lower fees or no fees at all.
8. Account Inactivity Fees
An account inactivity fee is charged when you don’t use your account for a certain period—typically six to twelve months. This fee is banks’ way of encouraging customers to either use their accounts or close them.
- How to Avoid It: Avoid inactivity fees by making occasional small transactions to keep your account active. You can also set up automatic transfers between accounts to ensure regular activity.
9. Returned Item Fees
When a check you deposit bounces, or a payment doesn’t go through due to insufficient funds, banks may charge a returned item fee. This fee can be as high as $35 and is usually applied to both the payer and the payee.
- How to Avoid It: To avoid returned item fees, ensure that checks you deposit are from reliable sources and that you have sufficient funds in your account before issuing any checks or payments.
10. Minimum Balance Fees
Some accounts require you to maintain a certain balance, and if your balance drops below that threshold, you’ll be charged a minimum balance fee. This fee can range from $10 to $25 per month.
- How to Avoid It: Choose accounts that don’t have minimum balance requirements or make sure to keep enough money in your account to meet the threshold.
Conclusion
Understanding bank fees is crucial to managing your finances wisely. While some fees may seem small, they can add up over time and reduce the amount of money you have to save or spend. By knowing what fees to watch out for and taking steps to avoid them, you can keep more of your money working for you. Always read the fine print of your bank’s policies and look for fee-free alternatives whenever possible.
