Bank Fees: What to Expect and How to Avoid Them
It takes money to manage your money, which is why most banks and credit unions charge fees on bank accounts. Just to keep an account open costs $5 to $25 a month, according to Bank of America. However, you may see higher or lower fees depending on your level of activity, frequency of overdrafts and any cost-saving actions you take. Be sure to review the types of fees your account may charge so you’re only paying for the services you need.
What are bank fees?
Bank fees cover the cost of opening and operating your account. You may also pay to access certain banking services. Common bank charges include monthly maintenance, minimum opening deposit, ATM, overdraft and nonsufficient fund fees.
Charging fees allow banks and credit unions to generate revenue and continue providing banking services. However, the fees vary depending on financial institutions and accounts, and some don't charge any.
For example, online banks with no physical branches incur minimal overhead costs. As a result, these banks can pass their cost-saving benefits to users. Meanwhile, accounts with exclusive features, like a premium checking account, usually have higher fees.
Regardless of your chosen bank, knowing the potential costs is important. You can find your bank’s fees by visiting the particular account’s information page, which usually specifies its monthly service and maintenance fee. You can search for terms like “account fees” or “fee schedule” on your bank’s website to find a comprehensive menu of charges.
Another place to look is your disclosure documents, which you get when you open an account. These documents provide a detailed overview of account costs and when they’re applied. Additionally, you’ll want to review your monthly or quarterly bank statements for any fees charged to your account. These charges can go unnoticed and add up if you aren’t careful.
If you need more help finding your bank’s fees or prefer speaking to someone live, call customer service or visit your local branch. Your bank’s contact information is typically on its website or in your statements.
What are common bank fees?
It’s a good idea to review the different types of bank fees so you know what you could be charged for. Common types of bank fees include, but aren’t limited to:
- Monthly maintenance fee: Banks may charge this monthly fee to cover your account's operational and administrative costs. This expense generally averages between $5 and $25 per month, but there are ways to reduce it or have it waived.
- Minimum opening deposit: Many banks may require you to deposit a minimum amount when you open your account. This amount usually ranges from $25 to $100, though you can expect higher initial deposit requirements for certain types of accounts, like money market accounts or certificates of deposit (CD).
- ATM fees: Most banks offer free ATM use at participating ATMs, but you’ll likely have to pay a fee if you use an out-of-network machine. That typically costs from $2.50 to $5 per transaction.
- Overdraft fee: If the amount of a debit card transaction exceeds the funds in your account, you may have to pay an overdraft fee. This charge applies only if you opt into overdraft protection, which authorizes a payment even if you don’t have enough money in your account to cover it. Overdraft fees can cost upward of $35 per transaction. Your account may incur this charge each day that its balance remains negative.
- Nonsufficient fund (NSF) fee: Similar to overdraft fees, banks charge NSF fees if a transaction exceeds the available funds in your account. Unlike overdrafts on debit card transactions, this expense applies to checks, electronic payments and other transactions. You don’t have to opt in to incur this charge. Also, banks can charge you even if your check bounces or your payment doesn’t clear. NSF fees can run upward of $37 per overdraft.
- Paper statement fees: Some banks mail monthly or quarterly paper statements by default and charge a fee for the service. This fee can range from $1 to $5 per month. To avoid it, consider changing your delivery preferences to receive electronic statements only.
- Wire transfer fees: If you want to send money directly from your account to another person’s account, you’ll have to pay a wire transfer fee. Banks typically charge $20 or more for domestic transfers and $35 or more for international transfers.
- Inactivity fee: If you don’t use your account for an extended period of time (usually six months or more), it can result in an inactivity fee. You can expect a fee of $5 to $20 per month on a dormant account.
- Lost card fee: Your first debit card is typically free, but if you lose it, you’ll likely have to pay a fee to replace it. Many banks charge $5 or $15 per card for expedited delivery of a replacement card.
- Foreign transaction fee: If you make purchases abroad or from a non-domestic merchant, banks may charge an intern ational transaction fee. This fee can be up to 3% of the purchase total.
Can you negotiate bank fees?
Negotiating bank fees is possible, but it depends on your provider and the type of fee.
A commonly negotiated fee is an overdraft fee. Banks are usually willing to reverse overdraft charges, especially for first occurrences due to an unexpected reason. You can also ask your bank about any fee waivers. For example, you can have your monthly service fee waived by completing certain tasks, like maintaining the minimum balance or enrolling in direct deposit.
Other types of fees are more fixed. Third-party fees for out-of-network ATM use, foreign transactions or wire transfers are generally less amenable because external entities establish them.
Still, if you want to reverse a fee, don’t hesitate to call your bank or visit a branch in person — the worst they can say is no. If the representative can’t help you, escalate your case to a supervisor or manager. If the bank still refuses, consider finding a new bank with more lax fee reversal policies or one that doesn’t charge fees at all.
Tips to avoid bank fees
Bank fees are avoidable. If you play your cards right, you may not even have to pay fees at all. Below are a few strategies to save on bank fees:
- Maintain the minimum required balance. Many banks waive monthly service fees if you always hold the required minimum balance in your account. You may have to pay the monthly service fee if your balance dips below the minimum requirement. Banks also will waive this charge if you set up direct deposit for paychecks. Be sure to understand your minimum balance requirement and carry a buffer in your account, just in case.
- Complete qualifying tasks. You can often get the monthly service fee waived by completing certain tasks. Some examples include signing up for paperless statements (which can also mitigate paper fees) or having multiple products with the same bank, such as pairing a checking with a savings account.
- Turn on bank alerts. Bank alerts notify you when your account’s balance is low, preventing overdraft, NSF and monthly service fees. This function can also send reminders about upcoming bills, recent deposits and suspicious activity. Depending on your preferences, you can receive alerts via text, email or mobile push notifications.
- Use in-network ATMs. Most banks will waive your ATM fee if you use a machine in their network. Banks may offer fee reimbursements with limits if you use an out-of-network ATM. Read the fine print or call customer service to determine if your bank offers this benefit.
- Compare bank accounts. Shop for bank accounts with features you need and skip those with features you don’t need, especially if they carry a higher price tag. Many online bank accounts have no fees, including monthly service, minimum opening and overdraft fees. You might also opt for a no-frills, free checking account.