Savings account fees can vary from one financial institution to the next. The best-case scenario is avoiding them altogether—and in some cases, that might be possible. Understanding how they work can help you sidestep these unwelcome expenses. Here's a breakdown of seven common savings account fees to look out for and how to avoid them.
1. Monthly Maintenance Fee
This fee is what a bank or credit union may charge you to keep your savings account up and running. It's typically deducted straight from your account each month. Monthly maintenance fees may be more common among financial institutions that maintain brick-and-mortar locations. Monthly fees vary but usually range anywhere from $5 to $8. However, fees for high-yield savings accounts can be as high as $25 per month.
How to Avoid It
In many cases, you can avoid this fee by:
- Maintaining a minimum account balance
- Having a checking account at the same bank that's linked to your savings account
- Setting up automatic monthly transfers from a linked account
2. Stop Payment Fee
You can schedule certain recurring bills to be paid out of your savings account each month. Setting up autopay can prevent you from missing a payment, but you may encounter a month where money is tight and you need to cancel the transaction ahead of time. This is called a stop payment. To do this, you'll need to notify the bank at least three days before the scheduled payment date. Stop payment fees vary but are usually around $30.
How to Avoid It
Make sure you have sufficient funds in your savings account to cover upcoming transfers. Checking accounts are better suited for paying bills and covering everyday transactions, but you may still encounter fees for Automated Clearing House (ACH) payments and checks you wish to cancel. Either way, maintaining a strong monthly budget can help you manage your bills more effectively.
3. Returned Item Fee
Let's say someone cuts you a check that you deposit into your savings account. This might be a gift from a family member or compensation for work. If that check bounces, meaning the person or business that issued the check doesn't have sufficient funds to cover the transaction, you may be charged a returned item fee. This typically ranges anywhere from $5 to $19, depending on the financial institution.
How to Avoid It
While you can't control whether another party has sufficient funds, you can make it a point to only accept checks and ACH transfers from trusted sources.
4. Wire Transfer Fee
A wire transfer allows you to electronically move funds in and out of your savings account. It can be a good option if you need to send or receive a large amount of money. You might do this when making a down payment on a home, or sending a significant amount of cash to a family member or friend. Wire transfers can cost anywhere from $0 to $50. Some banks might only charge for outgoing wires, while others may also charge you for incoming wires. Either way, international transfers typically cost more than domestic ones.
How to Avoid It
There are many ways to send and receive money for free. Platforms like Zelle, Venmo and PayPal are good examples. For large amounts of money, a certified check is a cost-friendly option.
5. Inactivity Fee
If your savings account goes unused for a while, your financial institution may charge an inactivity fee. This might happen if you haven't added or withdrawn funds in at least six months. The fee can vary but is usually around $5 to $20.
How to Avoid It
Setting up automatic transfers to your savings account each month is one way to avoid an inactivity fee. You'll also be building your emergency fund or other savings fund in the process. Another option is to use your savings account to pay a recurring monthly bill.
6. Overdraft Fee
If you initiate a transfer but don't have enough funds to cover it, your bank may cover the transaction so that it still goes through. That will likely trigger an overdraft fee—and it could be charged daily until you replenish your account. This fee is generally about $30 per transaction.
How to Avoid It
Budgeting can help ensure that you have enough money in your account at all times. You can also look into overdraft protection. It will automatically pull money from a linked account if you're short on funds. Overdraft protection is typically associated with checking accounts, but savings accounts are eligible too.
7. Nonsufficient Funds Fee
If you're unable to cover a transaction, it could be canceled altogether—and your bank may hit you with a nonsufficient funds fee. The bill you were trying to pay might also go unpaid. The average nonsufficient funds fee is $34, according to the Consumer Financial Protection Bureau.
How to Avoid It
The only way to dodge a nonsufficient funds fee is to make sure your savings account is appropriately funded. For example, if you're using that account to cover your monthly mortgage payment, get in the habit of moving money into that account on a regular basis.
How to Avoid Savings Account Fees
Every savings account is different, but here are a few ways you might be able to avoid fees:
- Choose a savings account that doesn't have certain fees. Online savings accounts, for example, might not charge maintenance fees. Compare your options to find the savings account that feels right for you.
- Maintain a sufficient balance. This can help you avoid fees related to stopped payments, returned items, overdrafts and nonsufficient funds.
- Meet your bank's monthly requirements. Your bank may be willing to waive certain fees if you maintain a minimum balance or have a linked checking account. Find out what's required to help you steer clear of unwanted penalties.
The Bottom Line
Savings account fees are no fun, but knowing how they work can help you dodge them. Maintaining a strong savings account is a key part of financial wellness. The goal is to save three to six months' worth of expenses in your emergency fund. Money that you shell out toward fees can eat into your savings.
While you build your savings, it's equally important to keep your credit going strong. That's why Experian allows you to check your credit score and credit report for free at any time.