Common Bank Account Fees and How to Avoid Them

Checking Saving ATM FeeGuest blog post by Damaris Olaechea, NerdWallet

Fees have become increasingly common, as tighter regulations and a recovering economy have made it difficult for banks to maintain their usual profit margins. While at times it may seem nearly impossible to find a truly free checking account, you can avoid fees with a bit of savvy thinking.

The first step to avoiding fees is learning about them. Here are five common fees you’ll want to watch out for.

ATM Withdrawal Fees

On average, consumers pay $4.13 each time they use an out-of-network ATM. Avoid these pesky withdrawal fees by choosing a financial institution that is a member of a broad ATM network like SUM or that refunds out-of-network ATM fees. Inclusive ATM networks allow you to withdraw money from a number of different ATMs for free (your bank credits you the withdrawal fee). Many online banks refund ATM fees or partner with networks like SUM.

Overdraft Protection Fees

At first glance, overdraft protection seems like a great idea. Nobody wants to be caught off guard by a declined transaction. However, the convenience of this service can end up costing you more money than the purchase you were trying to make in the first place. In a 2008 study, the FDIC found that overdraft protection fees range from $10-$38, and the median fee assessed was $27. Fortunately, the Electronic Fund Transfer Act ensures that you can decide whether to opt in to this service.

To avoid an overdraft or a non-sufficient-funds charge, check your account balances regularly, so you know where you stand before making any new purchases.

Monthly Service Fees

Some financial institutions charge a nominal monthly fee for simply keeping your money with them. Terms and conditions attached to this fee vary. Sometimes you can waive it by maintaining a minimum monthly balance, regularly depositing a certain amount of money, making a set number of debit card purchases or having a specific number of other products with the bank or credit union.

If you’re continuously hit with the monthly service fee, it’s important to take action. First, try talking with your banker or a representative. If you’ve been a customer for years and otherwise enjoy working with them, it’s worth the effort to find out if they may be willing to waive their monthly fees or if you can consolidate more accounts to that bank.

On the other hand, you could just switch to a checking account free of monthly service fees.

Minimum Balance Fees

Many checking and savings accounts come with minimum balance requirements. For many people, meeting a minimum balance requirement is not a problem. However, if you’re getting hit with a fee each month for not maintaining the required balance, you probably don’t have the best account to meet your needs.

Avoid this fee by talking with your banker or a representative about your situation. See if they have a different account, either without a minimum balance requirement or one with a lower minimum that you can meet.

Early Withdrawal Penalty

Some savings vehicles, such as CDs, charge a penalty for early withdrawals. No one wants to pay for the right to access their own funds, so getting hit with this charge can be frustrating.

Avoid withdrawal fees for these types of accounts by only investing funds when you’re 100% certain you won’t need to access them before you’re allowed to. Find other kinds of savings accounts for your rainy day fund and anything else you may need access to in the short term.

Always Review Monthly Statements

Because financial institutions continue to apply new fees, it’s important to review your statement each month. If you find any unexpected fee charges, don’t be afraid to contact your bank or credit union to discuss them. You may find a way to get your fee waived or, at least, figure out how to avoid incurring such a fee in the future.

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