How to Avoid Bank Fees

Daniel Penzing
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There are a lot of common bank fees. Read our guide to find out how to avoid paying them.

There are a lot of common bank fees. Some are worth paying, but others are unnecessary and better avoided. If you’re looking at your bank statement and seeing a lot of unexpected fees, this post is for you. In it, we’ll take a look at the worst offenders and how to avoid them. You’ll know how to avoid a lot of unnecessary bank fees.

Three Tips for Avoiding Fees

Without a doubt, banks have become a necessity in American life. For most people, our primary account is with a bank and we rely on it daily for everything from electronic payments to ATM and debit card transactions. Banks are constantly competing for our business by cutting fees, offering better rates, and generally providing the best possible service.

Despite all these ongoing changes, bank fees have remained relatively static, with the majority of banks charging the same amount for similar services. This means that by cutting out fees, you can save yourself some serious cash. Following a few basic tips and guidelines will help you avoid unnecessary bank fees.

Know the Fees

The first step in avoiding bank fees is to know exactly what you're paying. After all, if you don't know how much you're paying it's very difficult to stop paying it. There are many common bank charges, and the amounts can be shockingly high.

Check-Cashing Fees

Many banks will charge a small fee for cashing checks. The good news, however, is that awareness is spreading and more people are demanding that banks eliminate this fee. For example, Bank of America announced in 2014 that it was eliminating many fees, including the check-cashing fee. Still, it's a good idea to check with your local branches and see if they are still charging for this service.

Most Common Bank Fees

The Minimum Balance Fee

In 1988, the Supreme Court ruled that the 3-6-3 rule…a tactic for draining bank accounts without incurring overdraft charges…violates the law by requiring customers to pay service charges on transactions where money was not owed. So the minimum balance fee was born as a way of forcing customers to spend their money and not just maintain a bare minimum balance.

When you open a checking account, you are typically able to avoid the minimum balance fee by agreeing to deposit a larger amount of money (the required deposit) into your account. This works so long as you maintain at least a minimum of that deposit in your account throughout the course of the year. If you do not, but still avoid overdraft fees, the bank may start to charge you a monthly fee. This is definitely a cost you want to avoid.

Also, if you are a new college student with no prior checking history, ask about a no-minimum or waived-minimum checking account. While your parents may not worry about overdraft charges, don’t forget that they will have to pay for them regardless of who is footing the bill.

The Overdraft Fee

This type of fee is charged by most banks whenever you overdraw your checking account. This can be either voluntary or involuntary. A voluntary instance would be when you write a check and your account does not have enough money to cover the check. Involuntary would be when you have the money in your account, but the check you have written is more than the balance in your account. When you apply for a checking account, you typically sign a paper that limits the amount of overdraft that can be taken out in a given day. Just as you would expect, this option is not always available to you.

Overdraft fees can cling to you for a while because they can roll over to the next month, and so on. Typically, banks will not charge more than six, at the most, overdraft fees in a row on a single account. After that, they most likely will close the account. You may see this on your statement as a fee for not maintaining a minimum balance in your account. The actual fee is the non-sufficient fund fee. This fee is the standard charge for any transaction that exceeds your balance.

The ATM Fee

Bank fees are everywhere. From monthly maintenance charges to account cancellation fees, banks make money any way they can. And one of the easiest ways for them to make money is with ATM fees. Making use of ATMs instead of teller’s windows and patronizing local ATM’s instead of those in a competitor’s branch not only cuts business for a bank’s competitor, it directly damages the bank’s bottom line. To make your banking experience easier and your bank account a little more full, follow these simple steps to avoid bank fees.

Maintenance Fees

When you open a new account, you will most likely get a welcome bonus. Unfortunately, that’s when the maintenance fees begin.

The bank uses the maintenance fees to justify charging you every month. The fees vary from bank to bank and checking account to checking account.

You can avoid the maintenance fees by not maintaining a checking account, but instead leaving the money tied up in the savings account.

However, you’ll be paying a much lower interest rate. As a result, you’re probably better off keeping as much money in the checking account as practical.

Just be sure to avoid withdrawals and transfers.

The Hard Copy Fee

Banks charge fees for things. One of the more common fees is the fee for printing your transaction records. They give you the option of having the bank mail you a floppy disk-like device that can save your records on. This disk is returned to the bank, and you pay the fee. The fees are typically not very expensive, but everyone wants to keep as much of their money as possible. You should look for a bank that will give you the option to receive your transaction history online. If this option is not offered, simply ask them about it. They will likely give you this charge.