Banking accounts are often accompanied by a few fees. Though they may seem like insignificant amounts, if you are not careful those small amounts can quickly add up. The best way to avoid the banking fees completely is to be aware of the fees and what you should do to evade them. Here is a list of the biggest banking fees and how they can be avoided.
1. Nonsufficient Funds (NSF) Fee
If you try to make a transaction, but it gets rejected because you don’t have enough to cover it, you can get tacked with a NSF fee and your transaction will get rejected. To avoid this fee, you will have to monitor your accounts to ensure that you do not go over. Check your balances regularly and keep and accurate checkbook.
2. Overdraft Fee
Related to the NSF fee, you will be charged this fee each time your bank clears a transaction that results in a negative balance on your account. The average amount for the overdraft fee is around $35. You can decline any overdraft protection, but you will need to stay on top of your account balance. Another option is linking your savings account to your checking account. If you do make a purchase that you cannot cover, you bank will automatically pull the extra amount from your savings account. If you do choose this second route, be aware that there is usually a fee (though most likely lower than the overdraft fee), so check with your bank to see if they have one and how much it is.
3. Service Fee
Some banks will change you a service free, typically monthly or annually, simply because you hold an account at their financial institution. This fee can be added on to both checking and savings accounts. It can be taken directly out of your account, so if you aren’t aware of when the fee is assessed, it could possible cause you to overdraft. To avoid the service fee, look around for a bank that offers free accounts. If there are none available to you, or if you wish to stick with your current bank, talk to a manager at your bank about getting the fee waived if you meet certain criteria, such as maintain a minimum balance of completing a certain number of transactions a month.
4. Return Deposit Fee
Believe it or not, some banks will charge you a fee if a check that someone else wrote you bounces. When the paying party’s check bounces, the money gets taken back out of your account and then you may be charged a fee – all because of someone else’s error. The best way to avoid this is to not accept a check from someone you don’t know well enough to trust that they have the right amount of funds to cover the check. Instead, accept payments in the form of cash, PayPal, money orders or cashier’s checks.
5. Minimum Balance Fee
Some bank accounts require you to keep a minimum balance. It is most common with interest-bearing checking accounts and savings accounts. When you open a new account, ask the teller how much the fee is and what the specifics are. The fee is usually assessed in one of three situations: if your average monthly balance is below the minimum, if your end of the month balance is lower than the minimum or if your balance drops below the minimum at any time. If your bank goes by one of the first two, you can possibly avoid the fee even if you have gone below the minimum balance at some point.
6. Account Closing Fee
This fee is taken when you close your account with the bank. Some banks will charge the same fee whether you have been with the bank a few months or for many years. On the other hand, there are some that will waive the fee as long as your account has been open for a certain amount of time, often over 90 days. When opening your account, be sure to ask if there is an account closing fee and what the terms are.
7. Inactivity Fee
In order to avoid the account closing fee, you may be tempted to leave the account open and simply not use it. Unfortunately, this can make you subject to an inactivity fee. If you don’t use your account for a specific amount of time, your bank may charge you monthly for it. Ask if you bank charges this fee, and then make sure you perform the minimum amount of transaction a month in order to avoid it.
8. Lost Card Fee
If you tend to lose things, listen up. If you lose your debit card, you may have to pay a fee to get it replaced. Do you want that new card rushed to you? You may have to pay extra. If you end up losing your card, there is no way around this fee, so try to keep tabs on your debit card. If you do happen to lose it, use other forms of payment until a new one gets to you in order to skip the rush fee.
9. Foreign Transaction Fee
If you make a foreign transaction using your credit or debit card, your bank may tack on a foreign transaction fee. You may even be assessed that fee if you purchase someone online from another country. Do your best to shop domestically to avoid this fee or apply for a cards with No Foreign Transaction Fee.
10. ATM Fee
If you visit the ATM of another bank, be prepared to pay a fee of anywhere from $1 to $3 for each withdrawal. In addition, some banks will charge you for using a competitor’s ATM, so you will actually be charged twice each time you withdraw money – once by the competitor ATM, and again by your bank. Avoid unnecessary ATM fees by always using your own bank’s ATM. Also, look around for a bank that will reimburse you for your ATM fees.
When looking around for a bank, it’s a good idea to shop around. Talk to the tellers, look into the different fees attached to the accounts and see which ones you can easily avoid before signing up for an account.