Category: Quick Guide / Money & Budgeting

⚡ Understanding Bank Fees and How to Avoid Them

Banks and credit unions may charge fees for maintaining an account, withdrawing money, spending more than you have, or requesting certain services. Understanding these fees can help you avoid unnecessary charges and choose an account that fits your needs.

Start With Your Account’s Fee Schedule

Every bank or credit union has its own rules. Review the account’s fee schedule to learn:

• Which fees may be charged
• How much each fee costs
• What causes the fee
• Whether the fee can be waived
• Whether your account has minimum-balance requirements
• Which ATMs you can use without a fee

You can usually find this information in your account agreement, banking app, monthly statement, or the bank’s website.

Monthly Maintenance Fees

Some accounts charge a fee every month simply for keeping the account open.

You may be able to avoid it by:

• Maintaining a required minimum balance
• Receiving qualifying direct deposits
• Making a required number of transactions
• Opening a student, senior, or other qualifying account
• Using online statements instead of paper statements
• Choosing an account without a monthly fee

Check whether the requirements apply every day or only on a particular date.

Minimum-Balance Fees

Some banks require you to keep a certain amount of money in your account.

The requirement may be based on:

• Your balance at the end of the day
• Your lowest balance during the month
• Your average monthly balance
• The total balance across multiple accounts

Ask the bank exactly how it calculates the minimum balance. If maintaining it is difficult, consider an account without this requirement.

Overdraft Fees

An overdraft happens when a payment is approved even though there is not enough money in the account to cover it.

For example, if you have $40 and make a $50 purchase, the bank may cover the transaction and charge an overdraft fee.

To help avoid overdrafts:

• Check your available balance regularly.
• Record checks and pending payments.
• Set low-balance alerts.
• Keep a small cushion in the account.
• Review automatic payments and subscriptions.
• Ask whether you can decline overdraft coverage.
• Link a savings account if the transfer fee is lower than the overdraft fee.

Your displayed balance may not include every pending check, purchase, tip, or automatic payment.

Insufficient-Funds Fees

An insufficient-funds or nonsufficient-funds fee may occur when the bank rejects a payment because your account does not contain enough money.

The business receiving the payment might also charge a returned-payment or late fee.

To prevent this:

• Confirm your balance before making a payment.
• Know when automatic payments will be withdrawn.
• Avoid scheduling several payments for the same day unless the money is available.
• Account for checks that have not cleared.
• Move payment dates when a company allows it.

ATM Fees

You may be charged for using an ATM outside your bank’s network. Both the ATM owner and your bank may charge fees for the same withdrawal.

To reduce ATM costs:

• Use your bank’s ATM locator.
• Withdraw cash at an in-network ATM.
• Request cash back during an eligible store purchase.
• Plan withdrawals instead of making several small ones.
• Choose an account that reimburses ATM fees, if useful.

Never pay for an unnecessary purchase solely to receive cash back.

Transfer Fees

Fees may apply when transferring money:

• Between banks
• By wire transfer
• Internationally
• From a savings account
• Through an instant-transfer service
• From an overdraft-protection account

Before sending money, check:

• The transfer fee
• How long it will take
• Whether standard delivery is free
• Whether the recipient will also be charged
• Whether the transfer can be canceled

Wire transfers can be difficult to reverse. Confirm the recipient carefully before sending one.

Paper Statement Fees

Some institutions charge customers to receive statements through the mail.

You may avoid the fee by:

• Enrolling in electronic statements
• Downloading statements from your banking app
• Saving copies securely on your device
• Printing only the statements you need

Do not switch to electronic statements unless you can access and store them reliably.

Check and Check-Order Fees

You may be charged for:

• Ordering checks
• Requesting a cashier’s check
• Stopping payment on a check
• Having a check returned
• Receiving check images

Ask about the cost before requesting one of these services. Some account types include free checks or cashier’s checks.

Foreign Transaction Fees

Using a debit or credit card in another country—or purchasing from an international business—may result in a foreign transaction fee.

Before traveling or buying internationally:

• Check your card’s fee policy.
• Ask whether currency-conversion fees apply.
• Consider a card without foreign transaction fees.
• Avoid unnecessary currency-conversion services offered by merchants.

Inactivity and Account-Closing Fees

Some institutions may charge a fee when an account remains unused or is closed shortly after being opened.

Before leaving an account unused or closing it:

• Check for scheduled payments and deposits.
• Ask about inactivity or early-closing fees.
• Allow outstanding transactions to clear.
• Download statements you need.
• Move the remaining balance safely.
• Get confirmation that the account is closed.

Do not assume an account will close automatically when its balance reaches zero.

How to Find Fees on Your Statement

Review each statement for words such as:

• Service charge
• Maintenance fee
• Overdraft
• Insufficient funds
• ATM fee
• Transfer fee
• Returned-item fee
• Paper-statement fee
• Interest charge

If you do not recognize a charge, contact the bank using the phone number on its official website, app, statement, or the back of your bank card.

If You Are Charged a Fee

1. Identify the fee and what caused it.
2. Check the account’s rules.
3. Contact the bank promptly.
4. Ask for an explanation.
5. Correct the problem that caused the fee.
6. Politely ask whether the fee can be waived.

A bank may reverse an occasional fee, especially if it is your first one, but it is not required to do so.

You can say:

I noticed a fee on my account and would like to understand what caused it. Is there anything I can do to prevent it in the future, and would you be able to waive it this time?

Choosing a Lower-Fee Account

Consider changing accounts if fees are frequent or difficult to avoid.

Compare:

• Monthly maintenance fees
• Minimum-balance requirements
• Overdraft policies
• ATM access
• Transfer fees
• Direct-deposit requirements
• Interest rates
• Branch and customer-service availability
• Online and mobile banking features

A “free” account may still charge fees for optional services, overdrafts, or out-of-network ATMs.

Quick Fee-Prevention Checklist

• Read your account’s current fee schedule.
• Check your balance regularly.
• Set low-balance and transaction alerts.
• Track checks and pending payments.
• Know when automatic payments occur.
• Use in-network ATMs.
• Choose standard transfers when possible.
• Review every monthly statement.
• Question unfamiliar charges promptly.
• Keep your contact information current.
• Change accounts if the requirements no longer work for you.

Remember

Most bank fees are easier to prevent when you understand your account’s rules, monitor your available balance, and review your transactions regularly. If a fee is unclear, ask the bank to explain it before assuming you must continue paying it.