Banking should not end up costing you a lot of money. Unfortunately, some bank accounts do come with fees, although these are often avoidable as long as you meet certain requirements, like maintaining a minimum balance. While savings accounts rarely come with fees, checking accounts more frequently have associated charges.
Before opening a checking account, shop around. Compare the fees charged by different banks to make sure you are getting the best deal possible. There are several different fees that banks commonly charge, including the following:
1. Overdrafts
Bouncing a check or overdrawing your account can come with a number of consequences, one of which is an overdraft fee. The overdraft charges can vary greatly across banks, so be sure to look into this fee even if you have no history of overdrafts—accidents happen. The average fee for an overdraft is about $35. Keep in mind that that’s $35 for every transaction when you have insufficient funds, not one fee of $35 when your account balance dips into the negative. In other words, you could be charged $35 multiple times per day if you don’t realize you’re overdrawn and continue making purchases.
While virtually all checking accounts charge overdraft fees, there are ways to protect yourself. You can usually set up warnings for when your balance gets low. Many banks offer overdraft protection, which is another fee, but less than what you would be charged otherwise. Overdraft protection links your checking account to another related account, like your savings or credit card. If your checking account has insufficient funds, money from your savings or credit card is automatically transferred to cover the transaction and prevent a negative balance.
2. Minimum balance
Many (but not all) checking accounts come with minimum balance requirements. Sometimes, this fee is charged as maintenance. The cost of this fee can vary quite a bit, from as low as $5 per month up to $25 or even more. Accounts with more features tend to charge more. Most banks that have this fee will waive it as long as you meet certain requirements. For example, you may need to have a minimum amount in the account at all times, or you may only need to have a set amount of money direct deposited into the account each month. Other banks may waive the fee if you connect your checking account to a savings account.
3. ATM
Many banks also charge a fee for withdrawing money from certain ATMs. While banks never charge you for using one of their own ATMs, you may face a fee when you use one operated by someone else. This fee is on top of whatever amount the ATM itself charges. When these charges combine, you can end up paying a relatively hefty sum just for accessing your own cash. If both parties charge $4 each, that’s a lot of money to pay even if you are withdrawing a large amount. Even with a $100 withdrawal, you still would be paying an eight-percent fee.
Of course, not all banks these fees, and some may even reimburse you for the ATM fees charged by others. In addition, some banks have apps to help you find nearby ATMs where you can withdraw free. The other option is withdrawing large amounts of cash from your bank to keep on hand, or to get cash back when you make a purchase.
4. Closing
Some banks actually charge a fee to close your account. Typically, this charge only comes into play if your account hasn’t been open for a long enough period of time. Usually, banks require accounts to be open for either 90 or 180 days to avoid the closing fee, which can be up to $25. This fee is particularly frustrating: you may be forced to choose between paying it, or keeping your account open and continuing to pay some of the other fees on this list.
5. Wire transfers
While wire transfers are a convenient way to send money to someone quickly, they can be costly. Checking accounts frequently charge up to $20 for a domestic transfer and even more for an international one. Unfortunately, you may not have many other options in some circumstances. For example, loan payoffs may require you to use a wire transfer and other official transactions can require this form of payment. Otherwise, you can look at other options. Some banks have easy ways to transfer money between members online. There are also several apps that allow you to send money to others quickly and cheaply; options include Venmo, Zelle, Apple Pay, and Cash App.
6. Paper statement
Not long ago, the thought of paying a fee to receive a paper statement would have seemed ludicrous. Today, with wide access to the internet and greater concerns about sustainability, it is in everyone’s best interest to avoid unnecessary paperwork. The fee for paper statements is usually only a couple of dollars per month, but this can become a large expense over time, especially if you do not actively use the paper statements. To avoid this fee, you’ll usually need to sign up for digital statements. Keep in mind that you can always print the digital statement at home if you want a copy, which saves time and mailing costs.