Tired of Crazy Bank Fees? Here's How to Avoid Them
August 29, 2023
6 min read
Have you ever felt like your bank account is playing a disappearing act, with fees and charges vanishing your money faster than you can say "balance check"? You're not alone.
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The banking world can sometimes feel like a maze of hidden costs and surprise deductions, leaving us scratching our heads and our wallets considerably lighter. But fear not, for this is the exposé you've been waiting for.
In a world where every dollar counts, understanding the ins and outs of those pesky bank fees is like putting on a suit of armor to protect your finances. From the notorious overdraft fees that seem to pop up out of nowhere to those sneaky ATM charges that make you question the meaning of "free" withdrawals—we're diving deep into the rabbit hole of financial frustration.
10 Tactics to Avoid Common Bank Fees
Banks provide various services, but those services come at a cost. Bank fees and charges can quickly add up, eating into your hard-earned money.
Knowing the most common fees can help you avoid unnecessary charges and keep more money in your pocket. Here are ten frequent bank fees and tips to dodge them.
1. Monthly Maintenance Fees
Many banks charge a monthly maintenance fee just for the privilege of having an account. These fees generally range from $5 to $15 per month. You can avoid monthly maintenance fees by opening an account at a bank that does not charge them.
Other banks may waive this fee if you keep a minimum balance or frequently use your debit card for shopping. Direct deposits or other rules might also get you off the hook. Be sure to read the account terms so you know how to avoid getting hit with a monthly fee.
2. Overdraft Fees
One of the most aggravating and costly fees is the overdraft fee. It's charged if you withdraw, make a purchase, or pay a bill for more money than you have available in your account. Overdraft fees are usually between $30 and $35 per transaction.
Always keep an eye on your account balance to ensure you don't spend more than what you have. If your bank gives the option for overdraft protection, it might be best to avoid it.
This stops any transactions from happening if there's not enough money in your account, helping you dodge any extra charges. To cover any potential overdrafts, link your checking account to either a savings account or a line of credit.
3. Out-of-Network ATM Fees
Need quick cash but don't see your bank's ATM nearby? Withdrawing money from another bank's ATM is convenient but often incurs fees from both your bank and the ATM owner. The out-of-network ATM fee your bank charges per transaction is commonly $2 to $5.
Scope out your bank's local ATM partners to avoid fees when you need money fast. When traveling, plan ahead and visit ATMs affiliated with your bank. Minimize fees by withdrawing larger amounts rather than making multiple smaller withdrawals in a pinch.
4. Foreign Transaction Fees
Traveling abroad? Foreign transaction fees can take a bite out of your vacation money. Here's how they work—if you use your debit or credit card internationally for any transaction like shopping, getting cash, or paying bills, your bank will likely hit you with their foreign transaction fee. This extra fee averages around 3% of the total transaction amount.
Give your bank a heads-up before you travel internationally so they expect foreign transactions and don't block your cards. Consider applying for a credit card that doesn't charge foreign transaction fees—it can save you money.
When you're abroad, get more cash out per ATM visit rather than making many small withdrawals. And exchange some money locally instead of putting everything on your cards.
5. Wire Transfer Fees
Wire transfers are convenient but costly for fast, secure transfer of large sums of money. Banks typically charge $10 to $45 per wire transfer, domestic or international. Additional fees may apply for incoming wire transfers.
Compare wire transfer fees across banks to get the best deal. Consider free alternatives like electronic bank transfers or services like PayPal for sending money. Opening a multi-currency account can eliminate wire transfer fees if you need to routinely wire large amounts overseas.
6. Account Inactivity Fees
Failing to use your account regularly can also cost you. If you don't perform any transactions like withdrawing, depositing, or transferring money for 6 to 24 months, the bank may classify your account as inactive and start charging a monthly inactivity fee, usually $5 to $15.
Avoid this fee by making at least one small deposit, withdrawal, or transfer every six months. Set calendar reminders to ensure you use your account regularly. Also, inform the bank if you'll be away for an extended time and unable to use the account.
7. Returned Deposit Item Fees
Trying to deposit a check that bounces or is rejected by another financial institution will incur a returned deposit item fee from your bank, typically $10 to $15 per returned check.
Curb returned deposit fees by only depositing checks from trusted sources. Ask the payer to electronically transfer funds instead. If necessary, call your bank to verify funds availability before depositing a large or questionable check. Make deposits well before bill due dates in case a check bounces.
8. Stop Payment Fees
Need to cancel a check that hasn't cleared yet? Placing a stop payment order lets you do this for a fee, usually $25 to $35 per request. Stop payment fees give the bank extra work to block the transaction.
Avoid stop-payment fees by keeping close tabs on outstanding checks and reaching out to recipients before they deposit them if needed. Use online bill pay instead of checks since many banks allow you to easily cancel scheduled electronic payments for free.
9. Account Closing Fees
Switching banks? Closing an account too soon after opening it or not maintaining a minimum balance may result in an account closure fee of $25 or more. This covers the administrative costs for the bank.
Review account terms to understand requirements before closing to dodge any penalties. If relocating, ask your existing bank if they have a local branch or sister bank to conveniently transfer your account to instead of closing it. Timing your account closure carefully can help you avert hefty fees.
10. ATM Balance Inquiry Fees
Ever slide your card into an ATM just to grab a quick account balance? While many banks provide this info for free, others charge a small fee ranging from $.50 to $2 per inquiry for non-customers using their machines.
Get in the habit of checking your balance via mobile banking before heading to an ATM. Knowing your balance ahead of time prevents having to pay a fee just to view your account balance on the machine. Become familiar with ATMs that don't charge for balance inquiries in your area.
Wave Goodbye to Bank Fees for Good
Navigating the world of bank fees requires vigilance and knowledge. By understanding the common charges banks levy on their customers and employing the strategies outlined in this guide, you can save substantial money over time.
Remember, being an informed account holder is your best defense against falling victim to unnecessary fees. So take control of your financial destiny, make informed choices, and let this guide be your compass in steering clear of the common bank fees and charges that can erode your hard-earned money.
