Bank fees are relatively common. If a bank charges fees—ATM fees, account maintenance fees, overdraft fees, stop payment fees and more—they can really add up. That's money better spent or set aside in your savings account.
If you notice bank fees listed on your monthly bank statement, you'll be happy to know there are several ways to minimize or avoid these extra charges altogether. Here are seven common banking fees and how to avoid them.
1. Monthly Maintenance Fee
Some banks, credit unions and other financial institutions charge a monthly maintenance or service fee to keep your accounts open. This fee is usually automatically deducted from your account. Monthly maintenance fees can average nearly $14 per month, or about $168 per year, according to the Checking Account Fee survey by MoneyRates.
How to avoid this fee: Monthly maintenance fees can vary from one bank to the next. But, you can often avoid paying this fee by opening up both a checking and savings account at the same institution, maintaining a minimum balance in your account, making a certain number of transactions each month or arranging for direct deposit.
2. Out-of-Network ATM Fee
Some banks charge you for using an ATM that is not in the bank's network or when traveling to another country. If you withdraw cash often from an out-of-network ATM, these fees can add up.
For instance, if you use an ATM while traveling abroad, you might be charged $2 to $5 by your bank for using an out-of-network ATM, plus 3% of the amount you withdraw. The ATM operator may charge you another $5. That means to withdraw $100 in foreign currency, you might pay $13 in fees, or 13% of your total withdrawn.
How to avoid this fee: To avoid ATM fees, try using only ATMs that are in your bank's network. Some larger banks may have branch ATMs in other countries, or partner with other banks or ATM networks that offer fee-free withdrawals. You might also want to choose a bank or credit union that allows you to use an ATM or your debit card for free, or even that reimburses you for a certain number of transactions per year when using an out-of-network ATM.
3. Overdraft Fees
You may be charged an overdraft fee if you don't have enough money in your account to cover all of your transactions, including making ATM withdrawals, using your debit card to make a purchase, making automatic bill payments or writing checks.
Overdraft fees vary but currently average around $30 per transaction. Some banks may even charge daily overdraft fees, which are collected every day that your account remains overdrawn.
Your bank may pay the amount overdrawn, or it may reject the transaction for nonsufficient funds. If it pays the overdraft, you may be responsible for paying an additional fee as well as the amount the bank advanced you.
How to avoid this fee: If your bank provides the option, consider linking your checking account to a savings account at the same bank or signing up for overdraft protection. That way, if you overdraw your checking account, your bank will automatically transfer funds from your savings account to cover the shortfall.
You may still be charged a fee for transferring the funds from one account to the other, but it will likely be less than the overdraft fee. You can also avoid this fee by keeping tabs on your accounts or signing up for notifications when your balance falls below a certain limit to ensure there's enough money to cover all your transactions.
4. Nonsufficient Funds Fee
If you use an ACH payment method or paper checks to pay your bills or make a purchase but don't have the funds in your account to cover these transactions, you might be charged a nonsufficient funds (NSF) fee. These fees, like overdraft fees, can be costly. In 2022, the average cost of each NSF fee was around $27. Additionally, the merchant or company you were paying may charge you a late fee if the bounced check means your payment is now overdue.
How to avoid this fee: The best way to avoid NSF fees is to check your bank account to ensure you have sufficient money in your checking account to cover any transactions you make. You might also consider setting up automatic alerts when your checking account falls below a certain minimum balance.
5. Stop Payment Fee
If you think a check you've written has been lost or stolen, it was written to the wrong address, you have insufficient funds in your account or there is a dispute over a purchase, call your bank and put a stop payment on the check so it's not paid or cashed by your bank.
This may also apply to ACH payments, like recurring monthly bill payments. Keep in mind that to stop payment on an ACH payment, you must notify the bank (by calling or in writing) at least three days before the scheduled transfer date. Many banks charge a fee for this service, which can vary but is generally in the $30 range.
How to avoid this fee: Although there's no surefire way to ensure your written checks won't be stolen or lost, you can lessen the chance of this happening by paying your bills online or by taking your checks to a local post office instead of leaving them in your mailbox. Pay close attention when writing a check to ensure you have the funds in your account and it's made out to the correct recipient. You'll also want to act quickly to stop payment before the transaction goes through or the check is cashed.
6. Check Fees
Although most people pay their bills via electronic transfer, some companies and individuals may not have an account that allows them to receive online bill payments, so instead take paper checks. Or, rather than risk sending money through the mail, you might choose to write a check to a person for their birthday or another occasion and include it in their card.
Some banks charge a fee for each check you write or if you write more than a certain number of checks each month. It's also likely that if you order your checks through your bank, you'll be charged a check printing fee, which is generally deducted from your checking account automatically. If you want to get a cashier's check, it will cost you between $5 and $15.
How to avoid these fees: Paper check fees vary and can depend on the style of checks you choose or the number you write each month. Some account types offer free standard check styles or discounts on non-standard styles. You can minimize this cost by paying as many bills online as possible, or sending money to friends or family through a payment platform or app. You might consider ordering your checks from a company that specializes in paper checks that can offer better prices than many banks.
7. Inactivity Fee
If you have a savings or checking account in a bank or credit union that you haven't touched for some time, you may find an inactivity fee added to your next statement. This fee, also called a dormancy fee, usually kicks in around the six-month mark without new transactions. Not all banks charge this fee, but if your bank does, it can range from $5 to $20.
You may receive notice from your bank that your account is inactive. If you do, call them to restore your account to active by making a small transaction. At that time, they may waive the fee.
How to avoid this fee: The easiest way to avoid this fee is to move funds in and out of your bank account by making deposits, transfers or withdrawals. You can set up a monthly transaction so the money is automatically moved from savings to checking and back again. Or, set up direct deposits out of your paycheck.
The Bottom Line
Although bank account fees are commonly accepted, a recent American Bankers Association (ABA) survey of adults over the age of 18 found that the majority of Americans pay little or no monthly bank fees. If your bank charges fees for overdrafts, stopping a payment, using an ATM or for another reason, you may be able to minimize the charges or eliminate them completely. This will give you more money to funnel into your emergency fund, down payment savings or just for a fun vacation.