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5 Common Bank Fees and How to Avoid Them


5 Common Bank Fees and How to Avoid Them

The new regulations that will limit overdraft fees and debit card fees will have an impact on bank profits, and banks will likely be looking to make up for that loss with new fees. So we will have to keep a close eye on our accounts to make sure that no fees sneak up on us. I thought it would be useful to review five common fees that you might see on your bank accounts with tips on how you can avoid these fees.

New fees are sometimes only communicated in your monthly statements. A recent example is a new check image fee that Wachovia has started to charge (see forum thread). So it's important to monitor the statements even if you regularly monitor your balance by logging into your account online. Also, account alerts can be useful. Some banks allow you to set up alerts that will inform you by email when there are debits from your account or if your balance falls below a certain level.

If you do get hit with a fee, be sure to call and see if they can provide a courtesy refund. It never hurts to ask.

These five fees are not necessarily the worst fees, but they are ones that savers are most likely to face. I included not only some tips to help you avoid these fees, but also some examples of fees that certain banks are currently charging. If you've seen other fees that you think would be useful for others to know about, please leave a comment.

  1. Monthly Service Fee - There's often a monthly fee if your average monthly balance is too low. Some banks have raised their minimum balance. EverBank did this on their money market account in 2009. There have also been cases in which a minimum balance is added to an account. This happened at Amboy Direct when they imposed a $100 minimum to avoid a fee. This was only communicated in the monthly statements.
  2. Inactivity Fee - If you haven't had any transactions on your account over a certain period of time (1 year is typical), some banks will start charging a monthly fee until there's a transaction. I've been hit more by this at credit unions than at banks. Patelco Credit Union started charging me a $5/month fee after one year without a transaction on its share savings account. Setting up automatic monthly ACH transfers into or out of the account from an internet bank can often prevent this. Make sure to check with the bank to ensure that the ACH will count as a transaction.
  3. Too Many Withdrawals from a Savings Accounts - Savings and money market accounts are limited by federal regulation to no more than six withdrawals done electronically or by check (it used to be limited to 3 checks). So I can't really fault banks for charging a fee when you go over this limit. Be careful when you open a new internet account and link it to a savings account. If that linking includes trial deposits that are withdrawn, that can count as a withdrawal. Also be careful when opening CDs. For example, it's easy to open multiple CDs at Ally Bank and have them funded from your Ally Savings Account. However, each withdrawal for a CD will count toward the six-per-month withdrawal limit.
  4. Online Bill Pay - More banks are making this free. Sometimes it's only free if you meet certain conditions. For example, if you have EverBank's FreeNet Checking, online bill pay is only free if you maintain a $5,000 minimum balance. Otherwise, they charge $8.95 monthly fee when you use online bill pay. I've also seen some banks charge for online bill pay if you don't regularly use it.
  5. ACH Transfers - Most internet banks allow you to make free ACH bank-to-bank transfers. A few will charge you a fee if you want a next-day transfer. Many brick-and-mortar banks don't offer ACH bank-to-bank transfers. The ones that do often charge when you transfer money out of the account. One example is Bank of America which charges $3 for ACH outbound transfers. Chase recently eliminated its fee for outbound transfers. If you want to avoid this fee, open an internet account like at Ally or Discover and initiate the transfers from the internet bank. It's rare for a bank to charge you when you pull funds from another bank (unless you go over the 6-per-month limit).


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Comments
13 Comments.
Comment #1 by Anonymous posted on
Anonymous
Re #3 Too Many Withdrawals from a Savings Accounts

There is no Federal limit on savings accounts. If there is a limit, it's money market account.


Also, watch out for banks that take back trial deposit amounts-- makes for an extra transaction against the limit.

Editor's Note: The Federal Reserve's Regulation D actually refers to "savings deposits" which are generally considered both savings accounts and money market accounts. This Federal Reserve press release describes recent changes to Regulation D and how these will affect savings deposits.

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Comment #2 by Anonymous posted on
Anonymous
Alliant CU has an inactivity fee ... which they call a "dormant account fee" ... of $10 per year. It seems to apply to both checking and savings:

"One year in which no withdrawals or deposits, other than credited dividends were made to the account."


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Comment #3 by Anonymous posted on
Anonymous
Please review Reg D

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Comment #6 by cactus posted on
cactus
Get a free checking account.

Then move a little money between the checking and the savings every quarter.

Also helps when you fund multiple CDs.

And helps when you take money out of an institution

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Comment #7 by Jo (anonymous) posted on
Jo
I was charged a $2.00 check image fee from Wachovia just recently. Threw me for a loop. I am quitting with them because of Wells Fargo making changes to something I thought was pretty decent. I emailed them and politely let them know as much. I wasn't P.O'd, just frustrated.

Makes me wonder if BBVA will be doing some crazy changes with SmartyPig now. I hate surprises, so staying aloof here.

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Comment #9 by Anonymous posted on
Anonymous
When comments are out of order, it's hard to follow the sense of them.  I'd like them all to be in order, not by popularity.

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Comment #10 by Rosedala (anonymous) posted on
Rosedala
TO #4...  I resent your uncalled for comment!  You are wasting space and time from other members with negative, UNHELPFUL comments.  Please refrain from such unwelcome behavior! 

If it weren't for the kind and intelligent efforts of Ken and his partner you wouldn't be able to take advantage of the ease with which we can find convenient financial institutions!!!

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Comment #11 by Anonymous posted on
Anonymous
To Anonymous # 9 - I actually find it a bit challenging to try to sequentially read through the messages and place them back to their original order,  Sometimes a comment makes a reference to a an earlier one which is not listed above it and you end up puzzled as to what that person was referring to in the first place.  You then to go down further and then read the first ones and exclaim, THAT is what you were talking about. *lol*

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Comment #13 by Anonymous posted on
Anonymous
Instead of complaining about other commenters why don't people notice the misinformation Ken has posted?  Even when the information here is true and correct, these days, it's rarely anything new under the sun.  The site "improvements" have done nothing to improve the quality of the blog posts. 

There are many other personal finance websites out there, people.  Broaden your horizons!

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Comment #18 by Anonymous posted on
Anonymous
If you're lazy, this place is great!

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Comment #20 by Anonymous posted on
Anonymous
I'm with you 19!  Why do your own research and learn something, when you can get spoonfed!  That's the American way!

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Comment #22 by Anonymous posted on
Anonymous
My daughter had a savings account with Bank of America and went in to open a checking, they told her about their ebanking checking account fand as long as all her transactions withdrawal, deposits, transfers are made online or with her card at the ATM she would not incur any service fees. She noticed her account was short $85 and when she called the bank they told her the $85 was an excessive withdrawal fee. She did what she was told by the bank representative, and now the bank is basically telling her when she called them...too bad...How can she recoup this money.

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Comment #23 by Anonymous posted on
Anonymous
Savings and MM accounts: Federal Regulation D restrictes transferring OUT 6 x per month @ ALL banking institutions.

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