How To Avoid Bank Fees 101: Did you know that last year in 2016, banks made $33.3 billion in overdraft fees alone according to WSJ – imagine what figure we would be looking at if we accounted all of the other various fees. That’s a lot of wasted money. In this post, we’ll inform you on how to avoid these types of fees, so you don’t lose your hard-earned money paying these bank fees.
What Are The Common Bank Fees?
Instead of letting these financial institutions take your hard-earned money. In this segment, I'll inform you on how to take the necessary steps to avoid paying fees altogether. Find out what your bank pins onto your account in fees and how to avoid paying those bank fees. Below is a list of nine of the most common fees financial institutions account holders pay. The first tip is to consider opening an account with one of the larger banks or banks that have no fees (i.e. free checking accounts, etc).
- Maintenance Fees: It's not uncommon that banks charge a monthly maintenance fee just for having an account. If your account does have a monthly maintenance fee, more than likely there are fee waivers. For example, ABC Checking Account has a monthly fee of $5 but you can waive it by having direct deposit, eStatements, or bill pay. Obviously each account will differ - some more demanding, some less but that should give you an idea.
- Overdraft Fees: This is otherwise known as an insufficient funds fee - banks charge overdraft fees when you write a check or use your debit card for an amount that exceeds your account balance. You can expect a charge of $15 up to $35+ with $25-$35 being your typical. To avoid paying overdraft fees, opt out of overdraft protection at your bank — this will deny any transaction that you have insufficient funds for, so you won’t be charged. In the case that you do have an overdraft fee, you can always try and call your bank for a "fee waiver." If you have a good record, if you're a good customer, etc, you more than likely will be granted with a waiver.
- Wire Transfer Fees: Whether you need to send or receive money through your bank, you’ll likely be charged a wire transfer fee. You can expect to be charged $15 up to $40+ give or take. You can avoid this fee by using a different form of payment like PayPal, Venmo, etc or by sending a check.
- ATM Fees: A handful of banks charge a non-network fee if you withdraw cash from another bank’s ATM. You can expect to pay $1.50 up to $4+ give or take. You can avoid using an out-of-network ATM or switch to a financial institution that gives you ATM rebates. Some financial institutions will allow ATM refunds (for example, up to $10, $15, $25, or unlimited refunds per month).
- Excessive Savings Account Withdrawals Fees: A savings account is a savings account - it's meant to be store your funds so you will be less likely to touch it. In turn, savings accounts sometimes come with excessive withdrawal fees. Some banks will allow you to withdrawal a certain amount or a certain amount of times per month. If you exceed, you can be charged a fee of up to a few dollars per transaction. Some bank's will even require you to have x amount in order to waive a fee. Plan ahead so you don’t make more than the allowed number of savings account transactions in a month.
- Minimum Balance Fees: When your account balance falls below the minimum amount set by your bank, you can be charged a fee. Typically, that fee comes in the form of a monthly maintenance fee, which is waived as long as you don’t go below the required minimum balance. You can refer back to the first thing on this list since a minimum balance requirement is usually one of the ways to waive a monthly fee. If you don’t think you can meet the minimum monthly requirement, look for a bank with no minimum demands.
- Paper Statement Fees: If you have paper statements, you'll more than likely pay a fee to get that all-important bank statement via mail. In a world we live in today, we can receive eStatements. A benefit of this is that you'll be saving trees and lessen the waste of paper - and in turn, you'll be saving money as well as eStatements are free. Paper statements, now, you will be charged. Many financial institutions offer this kind of incentive, so check with yours.
- Foreign Transaction Fees: Shopping in a foreign country with a U.S. debit or credit card can result in your bank charging you a foreign transaction fee. Some banks will charge you a percentage to purchase items in a foreign country or even online from a foreign country. Keep in mind that some banks do not charge foreign transaction fees, so if you plan on going abroad, consider signing up for an account at a bank that doesn’t.
- Account Closure Fees: Some financial institutions charge an early account closure fee. If you have opened an account that you have decided to close, be sure to check with a banker or even read the fee schedule to see if there are any sort of account closure fees. When opening an account, typically you'll need to keep the account open for at least 3-, 6-, or even up to 12-months to avoid the fee. If so, I would suggest taking note of when you opened the account and how long you will need to wait to close the account to avoid the fee(s). The only way to avoid this fee is to wait until the designated period of time has passed — or stick with a bank that has no early termination fees.
How To Avoid Bank Fees & Author's Verdict
Now that we broke down the typical fees financial institutions charge, hopefully you now have the means and knowledge to avoid them. Your best bet if you're trying to have the least of worries is to open a fee-free account. In the case that fees can't be avoided (because life happens), be sure to build an emergency fund. I usually advise my family, friends, and whomever to build AT LEAST a 3-month emergency fund (6-month or even up to a year plus to be even more secure). What I mean by this is to save up enough money to last you whatever time period you choose. For example, a 3-month emergency fund - save up enough money for all expenses, necessities like food and water, etc in the case you're not able to work, create income, etc. Hopefully you get the idea. In addition, do monitor you bank account, activities, etc often and regularly. This will also help you in noticing any sort of suspicious activity in any case. If you have any further questions, need help clearing up some ideas, or even some tips to be more financially literate, feel free to drop a comment/question below! Have any other tips? Feel free to share as well! If you're interested in earning extra income, be sure to check out our list of the best bank deals & bonuses! Be sure you brush up on what a hard pull or soft pull is before opening an account as well!