Bank accounts help with many of our logistical financial needs (like the details of moving money around). But most charge fees that can quickly add up. This is particularly annoying since many of these fees are not consistent between banks.
So let’s avoid them!
Account Maintenance Fees – A charge for having the account.
Minimum Balance Fees – Some banks have minimum balance requirements and charge you for going under that amount, such as $500 or $1000.
These two first fees are important to avoid because they are likely to be charged consistently, so can easily cost you $200 a year for something another bank may charge $0.
The best way to avoid these types of fees is to research and compare different bank accounts before you open one.
If your current account charges these fees, you should compare that account to other accounts offered by your current bank, as well those offered by other banks.
If you want to change banks, you should check if your current bank will charge you for closing your account – that’s another possible fee.
These are the three most important fees because they can be charged over and over again.
Debit Card Transaction Fees
ATM fees – when you’re charged for using an ATM that isn’t your bank’s. ATM fees can be charged by both the bank or machine giving you the money AND your own bank.
ATM fees are best avoided by using your own bank’s ATMs.
But this can’t always be helped. Some banks do offer accounts that don’t charge this fee and a few even credit your account if you have to pay a fee from another bank.
If you do have to use an ATM that doesn’t belong to your bank, look for one with the lowest withdraw fee. Sometimes stores will offer no-fee ATMs to entice you to come in.
Overdraft fees – a charge for trying to spend money you don’t have in the account.
While there are some things you can do to lessen those fees – pick a bank that doesn’t charge high fees or link a savings account to your debit account – the number one thing to do is keep track of your balance and not overdraft your account.
Banks collected over $11 BILLION from overdraft fees alone in 2019, according to The New York Times (link).
Debit Card Transaction Fees – Debit cards (link) are generally cheaper to have than credit cards, but some banks charge you a fee when you use the card to pay for a transaction.
The fees are usually low, especially compared to overdraft fees, but can still add up. If you have this kind of debit card, you can often choose to process it as a credit card at time of payment.
If your bank won’t let you do that but is charging you fees, it’s probably time to shop around. You might even want to just find an example of a bank that doesn’t charge fees and tell your current bank that you’re going to switch if they don’t match the other bank.
Specific Service Fees
These are fees for less commonly used services or currently unpopular services.
Examples include fees for getting your statement in the mail instead of online, wiring money and making transactions in a foreign country.
If you would rarely do any of these things, you likely don’t need to focus on them when picking a bank account.