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3 Kinds of Bank Fees That You Can Easily Avoid

Tips to pay less for keeping your money in the bank

Overdraft fees
iStock / Getty Images

Bank fees have fallen during the pandemic, but that hasn’t stopped consumers from spending huge sums on these added expenses. Dubbed “junk fees” by the Consumer Financial Protection Bureau (CFPB), bank fees drain tens of billions of dollars from American households each year. ​

They run the gamut from charges for not having enough cash in your bank account to charges for withdrawing money from an out-of-network ATM. In 2019, overdraft and non-sufficient funds revenue hit an estimated $15.47 billion, according to the CFPB.

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But there is some good news: According to Greg McBride, chief financial analyst at Bankrate, bank fees, while “still as ever present as they have been, ... are also more avoidable than ever before.”

If you’re looking to reduce overdraft fees, monthly maintenance charges or fees for withdrawing cash, there are ways to do so — and they don’t require finding a new financial institution. Here’s how you can avoid the most common bank fees. ​

1. ATM fees ​

Withdrawing money at ATMs is all about convenience, which is why so many consumers go to the nearest location, even if it’s not in their bank’s network. Sure, withdrawals are free at your bank’s ATMs, but if you need cash in a pinch and there are none nearby, the fees for using out-of-network ATMs can add up. To avoid these fees, do the following: ​

  • Stay in network. “There are tens of thousands of ATMs around the country in some of these networks,” says McBride. Locating them is easier than ever these days. A quick check of your bank’s website or mobile app should yield a list of nearby ATMs. Also, some online banks that don’t have their own ATMs will reimburse you for any ATM fees you incur. ​
  • Get cash back at the point of sale. When you use your debit card at a store checkout and get cash back, you’ll avoid a visit to an ATM and thus a potential fee. “If there are no nearby ATMs and you’re in need of cash fast, consider taking out a larger amount so you have it on hand and don’t get hit with another fee should you need more cash soon after,” says Poulomi Damany, general manager of money and tax at Credit Karma. ​

Keep in mind that the average cost of an out-of-network ATM transaction is currently $4.66, according to a recent Bankrate study, the highest it’s been since 2019. Meanwhile, the average ATM surcharge on non-customers reached $3.14 per transaction, which Bankrate said is a record high. 

2. Overdraft fees

Overdraft fees can be a drain on your bank account. For many people, they create a never-ending cycle of bounced checks and extra fees, which is one of the many reasons these fees get so much scrutiny from government watchdogs and consumer advocates. After all, overdraft fees tend to penalize customers with limited financial resources, creating obstacles for them to overcome. ​

Fortunately, there are ways to avoid these fees as well. ​

  • Take cash out instead of using a debit card. Overdraft fees occur when you use your debit card, so don’t use it. Instead, consider taking cash out when you get paid and dividing it among your spending categories. “If you start the week with $100 in your wallet and you’re down to $30 by Wednesday, you know you have to plan and pace yourself,” says Damany. ​
  • Get notified. Most banks offer customers the option of signing up for notifications when their balance reaches a low level. The alerts come via text or email. If you link your savings to your checking account, you can quickly move money when you receive a low-balance alert. That will prevent an overdraft fee that could push you into the red and prompt a charge. You can also opt out of overdraft protection. If a check hits your account and there aren’t enough funds, it will simply be rejected. 

“We are starting to see banks decreasing their overdraft fees or decreasing the instances where they apply, and in some cases eliminating the fees altogether,” says McBride.

The CFPB found consumers who pay more than 10 overdraft fees per year are responsible for close to three-quarters of all overdraft fees. They shell out an average of $380 in these fees annually, making it difficult to catch up. Banks have been lowering their overdraft charges in recent years, but not by enough.​

3. Monthly maintenance fees

Monthly maintenance fees, also referred to as monthly service fees, are the amount y​ou pay to store your money with the bank. They’re typically withdrawn from your account automatically on a monthly basis. Although some banks charge no such fees, many still do.

There are several ways to avoid them, including maintaining a balance in your checking account, signing up for direct deposit or having a predetermined number of transactions per month. Of the ways to waive this fee, Bankrate found that direct deposit is the most commonly offered. ​

“We see a very widespread availability of free checking accounts, with 46 percent of non-interest checking accounts free,” says McBride, noting that there are some checking accounts specifically geared toward older adults that have low or no fees. “Almost all of them [banks with a maintenance fee] can waive it by having direct deposit of your paycheck or Social Security check.”