3 Bank Fees You Should Never Pay

Bank fees have definitely been rising over the past several years. For example, the average overdraft fee has risen from $20 in 2005 to $34 today.

However, there are some fees charged by banks that you should never have to pay. It may require switching account types, or even moving your accounts to another bank, but there are ways to avoid the most common bank fees.

Overdraft fees
The average overdraft fee in the U.S. is now $34, and banks will actually charge several fees at once if there were several transactions producing a negative balance.

Fortunately, there are some ways to lower, or even eliminate the fees. Many banks have some sort of overdraft protection program, in which you link another account with the institution to your checking account.

If a transaction will overdraft your account, the funds to cover it are automatically transferred from the other account and you are charged a fee that is a fraction of the standard overdraft fee. Terms, conditions, and fees vary from bank to bank, and somewhere around $10 seems like a normal charge for this. Not ideal, but it's better than paying over $30.

Most banks allow you to "opt-out" of overdraft protection, meaning that any transactions which will produce an overdraft are rejected. If you choose this, be aware that a check will bounce if there aren't sufficient funds in your account, and debit card transactions will be declined.

However, consider the savings it could result in. According to recent data, the average account holder with overdrafts enabled pays $119 in fees per year, as compared with just $28 per year for those who cannot overdraft.

Some banks are creating specific accounts designed to eliminate the possibility of overdrafting entirely. For example, Bank of America's "SafeBalance" account charges a $4.95 annual fee but guarantees that the account will never overdraft.

With the account, you can't write paper checks, so check bouncing isn't a possibility. And, if you attempt a debit card transaction, ATM withdrawal, or online bill pay without adequate funds, the transaction is simply rejected.

If you don't actually use paper checks, and don't want to worry about overdrafting, an account like this may be worth considering.

Checking account fees
Most banks charge a monthly fee of between $10 and $20 to maintain a checking account. Fortunately, there is almost always a few ways to avoid paying the fee.

Direct deposit is a big one, and the amount varies by institution. For example, Bank of America's Core Checking account waives the fee with a minimum monthly direct deposit of $250, while Wells Fargo's Everyday Checking account has a higher requirement of $500. In fact, a lot of people who have used direct deposit for years aren't even aware that their account has a fee.

Other common ways to waive the fee include maintaining a minimum balance, and for basic accounts $1,500 seems to be pretty standard. Many banks automatically waive account fees for college students, or for anyone under a certain age. Or, some banks will waive your fee if you simply use your debit card often. For instance, Wells Fargo waives their fee with 10 debit card purchases in a month.

The point is that you should shop around and find an account with fee waiver criteria that apply to you. Sure, a $12 monthly fee doesn't sound too bad, but that adds up to $144 per year, and who couldn't use that?

ATM fees
This is the easiest to get out of. Big banks have large, nationwide ATM networks, so there is really no excuse (other than laziness) for not using your own bank's ATM. It's really not worth the $5 or so in combined fees to save a quick drive.

And, many smaller banks recognize their disadvantage here and will actually reimburse non-bank ATM fees. For example, Ally bank's checking accounts don't charge any ATM fees and will reimburse fees charged by other banks' ATMs at the end of the month.

This can be even better than the convenience offered by the big banks, as it literally makes every ATM you see part of your "network".

Fees can really add up...
As mentioned, the average checking account holder with overdrafts enabled pays $119 per year in bank fees per year.

And the key takeaway here is that most, if not all, of this amount is completely avoidable. By getting an account that works for you, avoiding overdrafts at all, and using ATMs that don't charge you fees, your savings can really add up over time.

Bank of America + Apple? This device makes it possible.
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its destined to change everything from banking to health care. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here


Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3076924, ~/Articles/ArticleHandler.aspx, 10/1/2014 2:07:58 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement