Keeping your money in the bank can be more expensive than you think. Banks are always competing with each other to bag new customers. But as soon as you deposit your money in one, they start charging you various fees—from overdrafts to ATM transactions and paper statements.
It turns out, more than 53 percent of self-reported households state that not having enough money to keep in a bank account is the primary reason for not having an account.
Traditional banks won’t give up their fees anytime soon. The good news is that there are several ways you can avoid paying most bank fees. And the first step to getting rid of pesky bank fees is to know what you are being charged for.
1. Maintenance Fee
A lot of traditional banks charge monthly service fees or maintenance charges on accounts. These are automatically withdrawn from your account every month. Sometimes the fees can be as little as $5, but a few banks also charge higher fees, and these are often non-negotiable. But these higher rates on bank accounts also come with additional benefits.
If you are wondering how to avoid maintenance fees, you should first check the requirements put forward by the banks to waive this fee. Sometimes, if you have $500 in your account all the time, you will be able to steer clear of paying the maintenance fee. You can easily find the rules listed on the bank’s website. If you can’t, consider talking to a customer service representative.
2. ATM Fee
The ATM fee is often confusing because it includes several fees wrapped into one. Ideally, you should use an in-network ATM to check your balance or withdraw money. Unfortunately, when using an out-of-network ATM, the bank may charge you up to $10, depending on the ATM you use. But that is the worst-case scenario. The average ATM surcharge in the US is $2.97, and the average out-of-network fee is $4.96.
To avoid out-of-network ATM fees, start by choosing a bank that has an extensive ATM network and has a machine close to your home or office. You can even choose an institution that doesn’t charge out-of-network fees.
3. Overdraft Fee
Overdraft fees happen to be one of the most common bank fees. Often, many banks charge you a fee if your checking account balance dips below zero dollars or when a purchase overdraws your account and the company covers your overdraft, so the transaction goes through.
Overdraft fees typically vary from bank to bank, but they usually range between $30 and $35. The average overdraft fee in the US is $32.30 each time you overdraw. Additionally, banks also sometimes limit how many times you can be charged every day.
Generally, banks feature an overdraft protection option you can enroll for. The overdraft protection links your checking account to a savings account. So, each time you overdraw, money is withdrawn from your savings account to your checking account, so the balance stays above zero dollars.
A few other banks also feature an overdraft line of credit option. So, when you overdraw, you are automatically borrowing money from a line of credit. You will have to pay the money back, sometimes with interest. It is much like after you apply for a payday loan.
4. Inactivity Fee
Lastly, banks charge a monthly inactivity fee if you haven’t used your account for a while. The duration is often six months. You could end up paying around $20 per month, which is a lot considering that you aren’t even using the bank account anymore.
Now the next question that pops up in your mind would be how to avoid inactivity fees. If you find that a bank account isn’t necessary anymore, your best bet is to close it. You can move all the money in that account into a new account that you are using.
If you do not want to close the account or have a reason to keep the account open, even though you don’t use it much, ensure you make an occasional purchase with your debit card so that the account remains active.
Closing an account also comes with additional fees. So, make sure you check up on your bank’s closing fee policy before making the decision.
Keep the Fees from Devouring Your Account
Bank fees will never disappear completely. However, you do have the power to avoid a lot of these account fees. A few strategies for good banking involve planning ahead for when you need cash, regularly checking your account, and keeping an eye on your balance. However, if you still find a few of these banking fees are hard to avoid, then ensure you shop around to find a bank and account that works for you.