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.
- 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.
- 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.
- 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.
- 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.
- 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).