Banks make billions each year in fees. That’s no exaggeration. In 2017, the average ATM out-of-network fee hit a record $4.69 per transaction. And U.S. consumers paid an estimated $34.3 billion in overdraft fees.
While banks are businesses and businesses need to make money to survive, the fee situation is growing out of hand. There are fees for everything from slipping below a minimum amount in your bank to accounts being inactive.
In fact, Bank of America just announced recently that it has initiated a new $12 fee. Previously, customers who did all their banking online (“eBanking” customers, in the bank’s parlance) paid no fees. Only those who went in to use a teller paid a fee. Last month, that changed — all eBanking accounts became Core Checking accounts, which come with a $12 monthly fee.
So let’s break down the five most common fees you may find at any bank and ways to avoid them.
Pesky Bank Fee #1: The Minimum Balance Fee
One of the most common bank fees out there is the minimum balance fee. It means exactly what it sounds like: You must keep a minimum balance in your account to avoid being charged.
This fee can be a recurring one for people who are paid at irregular intervals (such as freelancers or service workers).
Banks usually have a few ways by which you can avoid this fee, such as linking a direct deposit to your account. This helps banks see that there is a source of income tied to the account, so money will be coming in regularly. And some banks, such as Capital One 360, don’t charge this fee at all.
Pesky Bank Fee #2: The Overdraft Fee
These are the fees that you incur when you overdraft your account, aka you try to take out more money than you have in your account.
Overdraft fees are bread-and-butter for banks. Every year, American banks are raking in fees worth more than $30 billion. This fee makes so much money for banks for a few reasons. First of all, people overdraft a lot. Second and more vicious, banks rank your overdrafts in order of highest to lowest and often end up charging you multiple times for overdrafting on the same day.
For example, say you have $100 in your checking account. On Tuesday, you spend $30 on gas, another $15 at Goodwill, and finally, $110 at the grocery store. The bank processes the $110 first, and you are now overdrafted. But banks often charge you for each overdraft. So rather than getting just one fee for overdrafting, you’ve now incurred three fees. Most banks charge $35 for overdraft fees, so you now owe $105 in fees, more than you originally had in your account.
Avoid this charge by avoiding overdrafts or by banking with an institution that doesn’t charge overdraft fees.
Overdraft protection is a third option. This is a line of credit that the bank will extend to you (with a high interest rate) up to a certain amount. That means the bank will cover expenses, up to a certain amount, after your account hits $0.
Not all banks charge this fee — we like Chime because it doesn’t!
- Accounts: Checking, Savings
- Access: Website, iOS App, Apple Watch, Android App
- Online Deposits: No
Pesky Bank Fee #3: The ATM Fee
There are few things that get my blood boiling like an ATM fee. It’s a fee that banks charge to get at my own money! You’re telling me that once I put my money in your bank, you’re going to charge me to take it out? That’s robbery.
Banks operate on an in-network and out-of-network ATM schedule. There are certain ATMs that are in network and where you won’t pay fees. Out-of-network ones come with fees. ATM fees are one of the trickiest fees to avoid. Most banks offer a list of in-network ATMs to customers.
And there are some banks that reimburse you for ATM fees. Check out banking with Ally if you’re interested in that.
Pesky Bank Fee #4: Maintenance Fees
“Maintenance” brings to mind someone fixing your ceiling or unclogging your garbage disposal. That’s not what it means to banks. Maintenance fees are fees you pay simply for having an open account with a bank, and usually it’s a monthly charge.
For example, Bank of America charges a $12 monthly maintenance fee. In order to avoid this fee with BoA, you have to keep at least $1,500 in your account at all times and make at least one $250 or more direct deposit each month, or be under 24 and enrolled in high school or college.
TD Bank charges a $15 monthly maintenance fee for its most basic personal checking account, but it’s waived if you keep a minimum of just $100 in your account at all times.
- Accounts: Checking, Savings, Money Market, CDs
- Access: Website, iOS App, Android App
- Online Deposits: No
Pesky Bank Fee #5: The Hard Copy Fee
If you can’t or don’t want to go paperless, you may be charged for it. Many banks charge their customers for mailed statements. The fee is waived for people who elect to receive statements via email, but when 23% of urban Americans and 28% of rural Americans don’t have internet access, sometimes going paperless isn’t an option.
To easily avoid this fee, sign up with your email address to get your statements. If you don’t use email, ask if they would be willing to waive the fee for the first year of your having the account. Asking never hurts and banks are willing to negotiate with new customers to keep them happy.
Barclays is awesome at not charging fees, including a hard copy fee.
Three Tips for Avoiding Fees
Fees are everywhere in banks. I know that I’ve railed against them quite a bit here, but there are just so many! The best way to keep your money in your account and out of the bank’s fee coffers is to follow these three points:
- Keep a cash cushion of at least $250 in all your accounts. This can be a tall order, but if you can do it, you’ll avoid many common fees.
- Always read the fine print when opening accounts. It’s tiny and it’s written in legalese, but knowing what exactly you’re signing on to is crucial. Knowledge is power!
- Stay alert. Banks can change their protocol at any time. They may raise or lower fees. They may introduce new ones. They may even eliminate them. Try to stay abreast of the information they send you. Always double check your accounts once a month to make sure there are no fees that are slipping by you.
Fees don’t have to drain your account. If worst comes to worst, be ready to pull your account from the bank altogether. There’s no need to stay at a bank that’s more interested in taking money away from you than helping you manage your money.