How to Keep Your Bank Fees to a Minimum

You may not realize it, but your bank could be charging all types of fees associated with your checking and savings accounts. You could be charged fees for general maintenance, checks, ATM use, overdraft costs, and more. Generally, these fees are deducted directly from your bank balances and may go unnoticed in the moment, but they can add up over time. While some fees can be avoided by simply changing your own card habits, excessive fees could be a sign that you need a new bank. So we asked financial experts what you can do to avoid fees and how to determine whether or not your bank is meeting your financial needs. 

What fees could your bank be charging you?

Most consumers understand that you may be charged a one-time fee in specific scenarios, like if you use an out-of-network ATM in a pinch. But, you’re likely not on board with getting charged recurring monthly fees by your bank. Those charges can be excessive and off-putting. 

“It isn’t the surprising or annoying one-off fee that will sink your financial ship, but regularly incurring fees that are otherwise easily avoided,” Greg McBride, chief financial analyst with Bankrate.com, says.

Paying a monthly account maintenance fee on your checking account, for example, can be $5-$15 per month. (That could amount to $60 to $180 per year.) “This can be easily avoided by switching to an account that has no balance requirement or waives the fee with direct deposit,” McBride explains.

Plus, while some major banks have moved to eliminate or reduce overdraft fees, many consumers are still affected. (According to Bankrate’s 2022 checking account and ATM fee study, 96 percent of bank accounts still charge a fee for overdrafts.) Overdraft fees happen when you don't have enough money in your account to cover a payment and, according to the 2021 FinHealth Spend Report, 43 percent of vulnerable households with checking accounts report having overdrafted in the past year, with 9.6 overdrafts on average. With overdraft fees sometimes costing around $35 per transaction, that could amount to about $336 per year.

To avoid these fees, McBride suggests linking a savings account to your checking account so that you're covered when you slip up and try to use more money than you have in your account.

However, the reality is that consumers are often faced with tough choices. “Even though overdraft fees pack a big punch, often $30 or more per occurrence, many of the consumers that routinely incur overdrafts have found that $30 fee beats having the electricity shut off and having to pay a $75 reconnection fee, or having the mortgage payment bounce and getting socked with a $100 fee from your lender,” explains McBride. So, even though you should try to avoid those fees whenever possible, “in instances where you run out of money before you run out of month, [the overdraft fee] may be the lesser of two evils,” says McBride.  

How to avoid excessive bank fees

Take an inventory of your bank’s fees and related rules regarding your accounts. Adam Davis, vice president of financial health, inclusion and liquidity at Capital One, suggests these tips for best practices.

Do your research

Take a look at the bank’s required account balance minimum and ensure that no fees are associated, Davis says. “There are offerings out there, like Capital One’s 360 Checking Account, that have no fees to open, keep and use,” he says.

Utilize the tools at your fingertips

Check out all the free mobile features your bank might offer. From depositing checks from your phone to setting up instant alerts, there are plenty of ways your checking account can save you time and money, Davis says.

Use free ATMs

An out-of-network ATM withdrawal can easily cost you around $5, which is $260 per year if you do that once per week. Instead, pick ATMs that are part of your banking network as much as possible. (You can often use your bank’s app to locate in-network ATMs.) Or, try to get cash back when checking out at stores that offer the option.

Or, should you just find a new bank?

If your bank no longer fits your financial lifestyle, it may be time to move on. “If you need branch access and the local branches have closed, then look to another community bank or credit union with a local presence,” Bankrate's McBride recommends.  And, if your bank doesn’t offer free checking accounts or a way to avoid fees without maintaining a large balance, free checking accounts are widely available elsewhere. The Bankrate study mentioned above found that 46 percent of banks offer a free, non-interest checking account—and most of the banks that don't offer a free account will waive the monthly fee just based on the account holders' direct deposit, account balance, transaction activity or a combination of direct deposit and transaction activity.

So, if you're feeling the financial pinch and need to make some changes, do an audit of the fees you're currently subject to, and see if there's a better option out there that can save you money.