Financial Guides

Understanding bank fees: Do you know all the fees your bank charges?

Banks provide necessary services, but these don't come for free. To make sure you're not paying for hidden charges, here's a complete guide on bank fees for personal checking accounts.

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It might seem counterintuitive to spend money while managing your money, but many bank fees are unavoidable. According to a study, 25% of people believe personal checking accounts provided by online banks have more fees than large brick-and-mortar banks. In fact, the opposite is true.

While most people still bank with large institutions, that means they’re subject to various bank fees. Some banks even have hidden fees that you may not know about if you don’t have prior knowledge.

To make the most out of your bank and save the most money, find out which fees to look out for. We’ll help you understand how to avoid certain fees as well as which banks have the best offers.

Why Do Banks Charge Fees for Personal Accounts?

At the end of the day, banks need to make money. Unlike any other business, there isn’t a traditional swap of money for products or services. Instead, banks collect their money through various fees. The banking fees pay for physical banks’ operational costs, maintenance, staff salaries and more. 

The following fees are some of the most common you’ll encounter with large banks.

Account Maintenance

An account maintenance fee is the closest thing to a service fee. True to its name, it’s what banks charge to maintain and oversee your account. Usually, banks charge a higher fee when you have a lower balance.

With a low account balance, you won’t accrue enough interest for the bank to cover the costs of maintaining the account. Usually, maintenance fees are monthly, though some banks may only charge the fees quarterly or annually.

Minimum Balance

Sometimes a minimum balance and maintenance fee go hand in hand. For example, some banks set a $500 - $1,000 account minimum on personal checking accounts where you have to pay a maintenance fee when your account falls below.

Some banks charge both maintenance and minimum balance fee, so it can be worth it to avoid those banks. Otherwise, to avoid these fees you need to make sure you have a set amount of money in your bank every month.

Overdraft Fees and Protection

Overdraft fees are big business for banks. Large banks gained $6.4 billion in ATM overdraft fees in 2016 alone. Banks charge overdraft fees when they’ve had to cover the cost of something on your behalf.

For example, let’s say you have $15 in your account but you purchase something for $35. The bank would have essentially loaned you $20 to cover the cost. Unfortunately, overdraft fees go beyond the cost covered. In this scenario, you might have to pay a $35 or more charge for overdrafting.

If you feel like you might be at risk from overdraft fees, you can pay for overdraft protection. In theory, overdraft protection can help you save money in the event of an overdraft. Yet, some research shows that customers with overdraft protection pay more in interest.

Check Fees

For most people, it’s rare to use checks. Yet, if you’re a small business owner running your business out a personal checking account, checks might be essential to running your business. Check fees can add up over time. First, there’s the cost to purchase and print checkbooks, which ranges from $15 to $35 depending on customization, amount and more.

You’ll also be subject to fees if you try to cash checks that bounce. Even though it might not be your fault, your back could charge you $10 or more for each failed deposit. 

Vice versa, you’re also subject to fees if you write a check that bounces for someone else. A bounced check will result in an overdraft fee, which is the same as the fee you’d be charged if you spent too much with your debit card.

Card Fees

Depending on how you use your debit card, you can rack up additional fees quickly. If you lose your card, many banks will charge a fee for a replacement that may be anywhere from $5 to $30 with additional fees for expedited shipping.

If you use your card often at ATMs, you can also rack up ATM transaction fees. These fees apply to most ATMs that aren’t on your bank’s network and can range from $1 to $5.

Instead of relying solely on your debit card, try using digital wallets to avoid losing your card. If you need cash, consider getting cash back from a store instead of an ATM that isn’t in your bank’s network.

Travel Fees

Banks charge travelers extra fees since there’s a cost in converting USD to other currencies. The foreign transaction fee will usually be a set percentage that applies to every purchase. Fees usually range from 1-3%, which adds up a lot over time.

To avoid foreign transaction fees, consider using cash. It may be cheaper to access ATMs periodically throughout your trip rather than using your card. You can also lookup ATMs abroad that might still be in your bank’s network. Through partner banks, you may be able to enjoy lower fees or no foreign transaction fees.

Inactivity and Account Closing

As counter intuitive as it may seem, banks will charge fees if you aren’t using your money as much. Inactive account fees usually kick in after 6 to 12 months of dormancy, and they could be up to $50.

You might also have to pay a fee if you decide to close your account, which can be up to $25. The account closing fee usually applies to younger accounts that didn’t have time to accrue interest.

How to Avoid Bank Fees

There are different strategies you can use to avoid each type of bank fee. As a good rule of thumb, keep in mind that online banking institutions and credit unions tend to offer fewer fees than larger banks.

Before you open a personal checking account, be sure to do your research so you can find the best deal. Depending on your financial habits, many fees may not apply to you. Banks with no fees are hard to find, though it’s more likely with savings accounts, online banks and small local banks.

If you are banking with a larger institution, try using the tips below to help keep your fees to a minimum.

Use Autopay and Direct Deposit

Setting up autopay for credit cards, bills and other transactions can help you establish a banking standard. When used along with the direct deposit, it’s easier to keep track of the amount of money that comes in and out each month.

By setting up a set time to deposit and withdraw money, you’ll know how much you have to work with each month. Setting up autopay and direct deposit can help you avoid minimum balance fees, overdraft fees and more.

Access Credit for Large Purchases

Instead of relying on your debit card for everything, consider credit cards for larger purchases. Especially if you’re a business owner, a credit card or a business line of credit helps you keep large transactions separate from your personal bank account. 

Credit cards can help you avoid overdraft fees as well as various debit card fees. With any credit card, make sure you’re making payments on time to avoid high-interest rates and long-term debt.

Set up Bank Alerts

Setting up alerts is one of the best aspects of online banking. With most large banks, you can set up alerts via mail, email or text. Customize your notifications so you receive alerts about anything from balance updates to overdraft notices.

Banking alerts can help you avoid most fees and help you take control of your finances.

Stay Financially Educated

Staying financially educated is another great way to avoid banking fees. In the world of banking, there are countless financial terms that the average person doesn’t understand. It’s important to understand everything about what large banks have to offer because it can help you avoid fees.

Understanding finances as a whole will help you feel more confident in reviewing your statements and speaking to your bankers.

Examples of Major Bank Fees

As you shop around for the best personal checking account deals it can be time-consuming to compare each bank’s list of fees. That’s why we’ve researched for you to put together a simple list of major banks and their fees. Compare fees below to find the bank that offers the lowest fees for your needs. Please note the fees listed below are only a portion of what you would expect to pay with large banks.

For a more comprehensive side-by-side comparison, we’ve created a handy downloadable resource. Simply subscribe here to gain access! 

Bank of America Fees

Bank of America personal checking accounts includes the following fees:

  • $14 monthly maintenance fee for checking customers without a minimum daily balance of $1,500
  • $2.50 ATM fees for non-Bank of America ATMs
  • $5 for foreign ATM transactions
  • $5 card replacement fee and additional $15 for priority shipping
  • $35 overdraft fee
  • $12 for returned deposits
  • 3% foreign transaction fee

Wells Fargo Fees

Wells Fargo personal checking accounts include the following fees:

  • $25 initial deposit fee
  • $10 monthly service fee for customers without a minimum daily balance of $1,500 (note that Wells Fargo is lowering this amount to $500 in October 2020).
  • $2.50 ATM fees for non-Wells Fargo ATMs
  • $5 for foreign ATM transactions
  • $35 overdraft fee
  • 3% foreign transaction fee

Chase Bank Fees

Chase Total Checking accounts include the following fees:

  • $12 monthly service fee for customers without a $1,500 minimum daily balance
  • $2.50 ATM fees for non-Chase ATMs
  • $5 per foreign ATM withdrawal
  • $34 overdraft fee
  • $5 card replacement fee
  • 3% foreign transaction fee
  • $12 for returned deposits

Citi Bank Fees

Citi Bank regular checking accounts include the following fees:

  • $12 monthly service fee for customers without $1,500 monthly balance in all combined accounts
  • $2.50 ATM fee for non-Citi ATMs
  • $10 overdraft transfer fee
  • $12 returned deposit fee
  • $34 overdraft fee

US Bank Fees

US Bank Easy Checking accounts include the following fees:

  • $6.95 monthly maintenance fee for customers without $1,500 average account balance
  • $2 paper statement fee
  • $2.50 foreign ATM transactions
  • $36 overdraft fee for items over $5
  • $12.50 overdraft transfer fee

Credit Union Fees

If you’re looking for a personal checking account that avoids as many fees as possible, you may want to look into working with your local credit union. Credit unions are nonprofit-making money cooperatives whose members can borrow from pooled deposits at lower fees and interest rates than you would expect. Credit unions tend to have fewer fees, fewer interest rates and fewer eligibility requirements. 

The biggest downside with credit unions is that they have less accessibility. Since they’re smaller than big banks, they have fewer branches and ATMs for customers to use. Credit unions also tend to offer fewer types of financial products.

If you’re looking for a basic checking or savings account, credit unions might offer the best deal for your finances. View some of the largest credit unions and their fees below.

Alliant Credit Union

Alliant Credit Union includes the following account fees:

  • $10 lost debit card fee (only applies to customers with excessive losses)
  • $15 fee for returned deposits
  • $1 per paper statement
  • $10 inactivity fee
  • $0 ATM fees
  • $10 account closing fee within first 90 days

Consumers Credit Union

Consumers Credit Union includes the following account fees:

  • $0 ATM fees (U.S.)
  • $3 foreign ATM transaction fee
  • $10 new debit card fee, $25 for priority shipping
  • 2% foreign transaction fee
  • $35 returned deposit fee

Keeping Track of Your Bank Fees

Regardless of the type of checking account you choose, it’s always important to keep track of your bank fees. Depending on your balance and account age, fees can change. Furthermore, banks can always decide to raise or lower fees at any time. Be sure to sign up for your bank alerts to understand how you’ll be charged.

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