While it may sound surprising, bank fees, which can be broken down into recurring and one-time fees, can be predictable and avoidable when you’re familiar with how they function. In this article, we’ll examine the most common kinds of each of these fees and the ways that you can minimize or eliminate them. With a bit of financial responsibility, you can feel secure that the money you make and keep in your account stays there — with limited impact from fees.
Common Recurring Fees That Can Drain Your Account
There’s some good news about recurring bank fees: Aside from optional subscriptions, the primary recurring fee that you’ll typically need to keep in mind is a monthly maintenance fee for your account if you’re subject to one. When you opened your account, the bank laid out terms regarding this fee, and many accounts offer a simple way to avoid it. Generally, you need to either maintain a sufficient balance in the account or have direct deposit set up for ACH deposits into your account. As long as either of these conditions are met, Chime notes that the bank will usually waive the fee for you, letting you use the account for free if this type of fee is present on your account in the first place.
Some banks have unique setups and additional features that cost money. It can be helpful to take the time to review your accounts with a banker to see if you’re incurring any regular fees. Often, the other main recurring fee that you might see is a card maintenance fee, which is harder to avoid. Fortunately, those fees tend to be relatively small and only happen once or twice a year.
Common One-Time Fees That Can Start Adding Up
One-time fees are typically levied when certain conditions occur, not on a regular basis. These fees usually spring up due to poor planning, interruptions to your income, or both. While you can’t always control things like job security, you can minimize your exposure to these unnecessary expenses. The primary fees that banks may charge you include the following.
Overdraft
If you spend more money than you have in your account, your bank may cover the difference for you to complete the payment. Called overdrafting, this process can result in a negative account balance. This feature is helpful if the alternative is missing a mortgage payment or incurring a late charge on a card, but if you go to the convenience store for a coffee and accidentally overdraft, you may end up paying an extra $25 per charge over the limit. Credit Karma points out that Americans spent almost $8 billion in overdraft fees during 2022, so it’s especially important to avoid these fees, as they can build up quickly.
Out-of-Network ATM
Banks generally let you withdraw money from any of their ATMs without a fee. They also let you withdraw funds from other ATMs but may charge you for it. Additionally, the ATM owner may also put a fee on the transaction, meaning that you could pay $6 or more just to access your money each time — unless you plan ahead and know where you can freely withdraw funds.
Wire Transfer
Not everyone uses wire transfers, but you may need to do so for professional purposes or to make certain payments. Each wire transfer can cost anywhere from $20 to $50, which adds up quickly, even if you only do it a couple times a year. According to PayPal’s schedule of fees, you can transfer funds without fees if you’re willing to take a bit more time.
Ultimately, if you pay attention to the “fine print” regarding your account and keep track of your finances, you should be able to avoid the majority of these fees, if not all of them. It may be a good idea to put reminders in your calendar about when certain payments will come out (such as your mortgage and car payment) and add reminders to check your account balance on a weekly or biweekly basis. While budgeting and financial tracking are entirely separate topics, all of these things play into your financial well-being.
Resource Links
“How to Avoid Monthly Maintenance Fees in 2023” via Chime
“What Is an Overdraft Fee?” via Credit Karma
“PayPal Consumer Fees” via PayPal