Banks have revolutionized the way we handle money. With online and mobile banking, transactions are faster, more efficient, and incredibly convenient. But here’s the catch—banking isn’t free!
Hidden among all the convenience are a series of fees that can quickly add up. If you have multiple accounts with your bank, such as checking accounts, savings accounts, and credit cards, these fees can become a serious drain on your finances.
In this article, we’re going to uncover nine common types of bank fees and show you how to avoid them. So, let’s get started!
Bank Fees You Need to Be Aware Of
Not all banks charge the same fees, and some may have additional uncommon charges. However, here are nine common types of fees that banks often impose on their customers:
1. Monthly Maintenance/Service Fee
Many banks charge monthly maintenance fees to keep certain accounts active. Usually, these fees apply to checking accounts, as they involve more activity compared to savings accounts and money markets. But fear not, there are ways to avoid them!
2. Out-of-Network ATM Fee
If you use an ATM that doesn’t belong to your bank’s network, they may charge you a fee for the transaction. On top of that, the owner of the ATM may charge you an additional fee. Avoiding these fees can save you a significant amount of money over time.
3. Early Withdrawal Penalties on CDs
Certificates of deposit (CDs) come with fixed interest rates for a specific period. However, if you need to withdraw funds from a CD before its maturity date, the bank will impose an early withdrawal penalty. It’s crucial to be aware of these penalties before investing in CDs.
4. Excessive Transactions Fee
Many banks limit the number of transactions you can make within a specific account, especially for savings and money market accounts. If you exceed these limits, you may be subject to an excessive transaction fee.
5. Overdraft Fee
Making transactions that exceed your account balance can result in overdraft fees. These fees can accumulate quickly, especially if your account remains overdrawn for multiple days. Luckily, there are strategies to avoid overdraft fees altogether.
6. Insufficient Funds Fee
Also known as non-sufficient funds (NSF) fees, these charges occur when you attempt a transaction without enough funds in your account. NSF fees vary across banks, so it’s essential to be aware of the specific fees your bank imposes.
7. Wire Transfer Fee
Sending or receiving wire transfers incurs fees, particularly for international transfers. It’s important to note that these fees differ from ACH transfers, which are usually fee-free. Consider alternative money transfer options to avoid excessive wire transfer fees.
8. Early Account Closing Fee
Beware of fine-print charges! Some banks may impose an early account closing fee if you close your account within a specific timeframe. To avoid this fee, make sure you are aware of the terms and plan to keep the account open for the required duration.
9. Dormancy Fees
Banks charge dormancy fees on inactive accounts, usually when the account holder passes away or moves away. To prevent these unexpected fees, ensure you make occasional transactions to keep your accounts active.
Tips to Avoid Bank Fees
Now that you know about these bank fees, it’s time to learn how to dodge them! Here are some tips to keep those fees at bay:
Choose a No-Fee Account
While finding a completely fee-free account is rare, some banks offer accounts with minimal fees. Look for banks that don’t charge monthly maintenance fees, overdraft fees, or non-sufficient funds (NSF) fees.
Maintain Minimum Balance Requirements
Many banks waive monthly maintenance fees if you maintain a minimum account balance. Consider keeping the required balances or consolidating accounts within the same bank to avoid fees.
Find a Bank That Doesn’t Charge Wire Transfer Fees
Though most banks charge fees for wire transfers, some banks offer this service for free. Research to find a bank that provides fee-free wire transfers to save on these charges.
Add Overdraft Protection to Your Checking Account
By linking your checking account to a savings account or money market account at the same bank, you can set up overdraft protection to avoid both overdraft and NSF fees.
Open an Account That Reimburses Out-of-Network ATM Fees
If you frequently use out-of-network ATMs, consider opening an account with a bank that reimburses the fees charged by other banks. This way, you won’t have to worry about those pesky fees.
Choose a Bank That Doesn’t Charge Excessive Transaction Fees
Before opening a checking account, check the transaction limit. If you anticipate exceeding the limit, opt for a bank that doesn’t charge excessive transaction fees.
Maintain Adequate Liquidity to Avoid Early CD Withdrawals
Certificates of deposit (CDs) offer higher interest rates, but they come with limited liquidity. To avoid early withdrawal penalties, ensure you have other liquid funds to cover your financial needs.
Time to Wave Goodbye to Fees
Bank fees can be sneaky and add up quickly, so it’s crucial to stay informed. Know what fees your bank charges and how to avoid them. By choosing the right bank and following these tips, you can save hundreds of dollars each year.
Don’t let bank fees drain your hard-earned money. Take control of your finances and say goodbye to those unnecessary charges!
For more money-saving tips and financial advice, visit Personal Finances Blog.