Bank Fees

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Bank fees, besides being small and inconvenient costs that burn a hold in your wallet, come in the form of regular monthly or yearly fees/fines. They also show up as convenience fees or penalties for certain behaviors, such as overdrawing your checking account.

ATM fees

Most transactions take place digitally, but in some situations, cash is still king. Withdrawing money from a network ATM can be a hassle, so out of urgency or laziness, sometimes it’s easier to just find the nearest one. The convenience of using a non-network ATM usually costs between $1 to $5. These common fees add up, but there are some solutions to minimize the ATM fees.

  • Use your bank’s mobile app. Many mobile banking apps have ATM locators, which make it easy to see if a network ATM is nearby.
  • Get cash back. Gas stations and convenience stores are sometimes easier to find than network ATMs. Purchase something small with your debit card and select the cash back option on the keypad. While there is still technically a cost to withdrawing your money, maybe you can enjoy a tasty beverage or snack.
  • Use peer-to-peer transaction apps. For example, your friend bought a $20 concert ticket for you. You pay him back and he wants cash. After you go to an ATM, pay a $3 fee, and withdraw the $20, the ticket costs you $23. Instead, consider downloading a peer-to-peer money transfer mobile app. Simply link your checking account or debit card to the application to securely send and receive money. Fees may be incurred for expedited transfers. The most well-known mobile options are Apple Pay, Venmo, and Cash App.

Minimum balance fees

Banks charge minimum balance fees if your account balance dips below a certain threshold. These minimum balance fees are usually between $5-$10 a month. Before you read your account’s terms and conditions, It’s important to understand the terms below: 

  • Basic minimum balance means that you will pay a fee if your account dips below a certain threshold at any time.
  • A daily balance minimum requires your account to be above a certain amount at the end of each business day. You can dip below the threshold as long as it returns to the safe zone before the day ends.
  • An average daily balance is calculated by adding the daily amount of your account in a monthly statement cycle,  divided by the number of days in the cycle. If your monthly average is above the minimum requirement, you can avoid the minimum balance fee.

Essentially, the best way to avoid minimum balance fees is to maintain healthy personal banking habits. Many minimum fees are waived if you make regular deposits. Sign up for direct deposit with your employer so that regular deposits are made without having to worry about making your way to the bank. Other than that, know what type of minimum balance fees your accounts have and stick to good habits.

There are also bank accounts – usually accounts at credit unions or online banks – or accounts for minors, students, or seniors – that don’t have a minimum balance fee attached.

Overdraft charges

Overdraft charges occur when you spend more money than you have in your account. Going in the red is stressful; overdraft fees are often hefty, between $20-$50 for each transaction dipping below a positive account balance. Oftentimes, this can make a bad financial situation even worse, as some fees are even higher than the amount overdrafted. However, overdraft charges may be avoided using the following methods.

  • Enroll in overdraft protection. Link your checking account to your savings account or credit card. When you overdraw your checking account, a portion of your line of credit or savings balance can be transferred to your checking. Be wary, some larger banks have an overdraft protection fee. However, the fees are much more forgiving than regular overdraft charges and are priced around $10.
  • Set up mobile alerts. Many bank apps will allow you to set up mobile alerts, through an app or text messaging, when your account balance is low.

Maintenance fees

A maintenance fee of around $10 covers the cost of keeping an account open, usually charged monthly. Like minimum balance fees, maintenance fees are often waived if you keep your balance above a certain threshold or if you make regular deposits. There are a couple of other ways you can waive maintenance fees.

  • Open multiple accounts. Maintenance fees are often waived for those who have multiple accounts with a single bank. Open a savings account or second checking account to avoid a monthly maintenance fee.
  • Use your debit card. Banks might waive these fees if you perform a certain number of transactions with your debit card per month.

It might also be worth it to look into free checking accounts. Credit unions and online banks normally offer the best free or low-cost options.

Lost debit card fee

Unfortunately, most banks will charge a fee to replace a lost or stolen debit card. The cost is unavoidable if a card goes missing; you have to notify your bank to report it lost or stolen and receive a replacement. A new card may cost around $5-$10 and could take days to arrive. If you need a expedited service, expect it to cost anywhere from  -$20 to -$30. While the fee may seems unpreventable, consider a couple of workarounds.

  • Use a digital wallet or credit card. Make use of digital wallets, such as Apple Pay or Google Pay, as mentioned above. Digital wallets can store your bank or debit information to make transactions. This could be a temporary fix to avoid the hefty expedited card replacement fee.
  • Research debit replacement policies. Some banks and credit unions will replace your lost or stolen debit card for free.

Foreign transaction fees

Dealing with money while traveling abroad can be challenging. Foreign transaction fees kick in for the convenience of debit and credit transactions or ATM withdrawals overseas. Like all other fees, this adds up over time. Consider the following in order to avoid this type of bank fee:

  • Check out Global ATM Alliance. Several major international banks have come together under a network that allows use of their ATMs without a foreign transaction fee. However, if your bank isn’t under the umbrella, the fee is around $5.
  • Look into cards for frequent travelers. There are certain cards which do not apply foreign transaction fees, but rather, offer rewards such as mileage.

Cashier's check and money order fees

Cashier’s checks are similar to checks and are considered highly secure because the money is guaranteed by the account holder’s bank. Cashier’s checks cost anywhere between $5 to -$10. A money order is used for sums up to $1,000, and usually costs less than $5. If you find yourself using cashier’s checks or money orders, look into the following in order to avoid fees.

  • High-tiered checking accounts: A cashier’s check may be waived if you have a high-tier checking account with other rewards.
  • Use online payment platforms. Services such as PayPal, Venmo, or Cash App do not charge any fees to send money.  

Final thoughts

Bank fees add up over time. Instead of practicing “out of sight, out of mind” with good personal finance habits, understand which bank fees you incur and why. Be realistic, pay attention to your accounts, and take action. If bank fees aren’t working for you, find a bank and bank account that better suits your needs.