Common Banking Fees and How to Avoid Them

by Emily Guy Birken on September 20, 2012

One of the most frustrating aspects of modern banking is the number of fees you see at every turn. In many cases, it can feel as though the bank is charging you to access your own money. For those individuals who don’t keep a close eye on their accounts, fees may seem like an unfortunate part of life—and banks certainly do seem to penalize the perennially busy or distracted customers with fees.

However, there is no reason why you should be handing over your hard-earned money to the bank each month. If you are consistently being dinged by banking fees, here are the most common ones you’ll come up against, and how you can avoid them:

1. ATM Fees

We’ve all been in the situation where we need cash and the only available ATM is outside of our banking network. The bank who owns the ATM charges a fee, with your bank’s out-of-network fee on top, and suddenly that twenty you’re withdrawing costs you an additional $4.

The best way to avoid these fees is to make sure you take out cash from your bank or your bank’s ATM before you need it. If you find yourself short of cash and on the spot, take a moment to check the area for one of your bank’s ATMs with your smart phone. This is one definite benefit to our current 24/7 connectivity.

2. Minimum Balance Fees

Many checking and savings accounts require that you keep a minimum balance in the account, or else you pay a fee. In some ways, this feels like hitting you while you’re down: your balance has dipped, so the bank will charge you money, meaning it will go down even more.

When it comes to minimum balance fees, the best method for steering clear of them is to switch to a no-minimum checking account. If you generally have no problem keeping your balance above the minimum but had one bad month, call and ask your bank if they can waive that single fee. Banks will often be willing to work with you to make you happy, provided that you’re only asking for a single waiver.

3. Overdraft Protection Fees

No one likes bouncing checks, but it happens to the most diligent of banking customers. If you assume that a deposit has cleared without double-checking, you may find yourself spending money that is not actually in your account. In that case, overdraft protection can make sure that your rubber check clears—often by tapping either an associated savings account or a line of credit. Unfortunately, the bank charges big money—about $20 to $35 per overdraft—in order to cover your mistake.

It’s a good idea to have your overdraft protection set up to draw from your own savings account, because having to tap a line of credit for overdraft protection makes you vulnerable to further financial headaches and potentially high interest rates. If you have overdrawn your account, you can potentially ask the bank to waive the fee if there are extenuating circumstances. For example, my car was totaled on the day I had planned to deposit my paycheck, and so an automatic transfer from my account overdrew it. When I explained the situation to my bank, they were happy to waive the fee, but only because it was the only time I had overdrawn my account in five years of banking with them.

4. Debit Card Transaction Fees

Some banks will charge you a small amount each time you use your check card as a debit card. Some banks charge you that small fee if you instead use it as credit. Though the fee is usually pretty small—between $0.10 and $1.50 per transaction—the money adds up if you regularly use your card for purchases.

Find out from your bank what type of transaction (credit or debit) you need to specify at the register in order to use your card for free. That quick question can save you a great deal of money.

The Bottom Line

Banking fees are an annoying part of modern finance. The best way to minimize fees is to stay on top of your checking and savings accounts. But even if you don’t balance your checkbook once a week, you can still handle your banking without being crippled by fees.

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Emily Guy Birken

Emily Guy Birken is a freelance writer and stay-at-home mom who is passionate about personal finance. She lives in Lafayette, Indiana with her mechanical engineer husband and her toddler son. She blogs about parenting at The SAHMnambulist and about the funny side of money at Live Like a Mensch.
  • John S @ Frugal Rules

    Good pointers. In regards to point #1, you can also look for banks that offer to credit back ATM fees charged by other ATM’s. I know it’s not terribly common, but it works out great. I have an account with USAA and they credit back the fees and it just hits our account at the end of the month.

  • I try to avoid all of these. A new fee that I’ve now been seeing is a check deposit fee. I deposit some checks through my smartphone to avoid going to the bank. It is nice and convenient, but costs $0.50 per deposit, which can be annoying.

  • There are some banks that charge none of these. I have never paid a fee with my USAA bank accounts. They don’t have a great interest rate but they have great customer service!

  • futuremilitary

    Another tricky one can be for people cashing your checks. I have the most basic package at my credit union, so it costs $1 every time somebody cashes a check I wrote them.

    -Christian L. @ Smart Military Money

  • We avoid bank fees by communicating with each other. If you have a joint account, don’t assume your partner is reading your mind that you want to buy play-off tickets (thinking of a friend of mine, not my husband…ha!) 🙂

  • Denise @

    I pay none of these. ATM fees are becoming less and less because every place seems to take credit now, and you can even get a debit card with a Visa or Mastercard logo if you’d rather not have a real credit card. I rarely give free plugs, but in this case I will… Huntington Bank (in certain states like Ohio, Michigan, Virginia, and others) is wonderful… no unnecessary fees and great service. I’ve been pretty impressed with them.

  • I don’t pay any of these fees. I’m lucky in that I have a convenience store chain that allows for free ATM withdrawals. My online bank doesn’t have minimum balance fees and I refuse to use a bank that has these. I also get free overdraft protection and they don’t charge debit card fees. With technology, it amazes me that anyone would put up with brick and mortar banks and their fees.

  • I can’t stand bank fees! Thankfully they are, for the most part, avoidable.

  • We bank with President’s choice financial and we get charged no fees and we like it that way. If we were to use our overdraft that would cost us $5 but we haven’t used it. If we can avoid them.. we will. Cheers Mr.CBB

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  • Kim

    There are plenty of banks that don’t charge fees, especially if you sign up for electronic statements and use a debit card. I hate fees and once changed banks because they started charging for online bill payments.

  • SB

    There are other fees like check cashing fee, statement fees. Specially the statement fee can be avoided by relying on the electronic statements.

  • The account I use to pay my student loans has a minimum number of monthly transactions fees. I’ve got to make at least 5 a month in order to avoid the $5 fee. It’s a PITA, to be honest, but the loan is SO close to paid that I don’t want to have to change all the routing info for another account.

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  • Since I opted out of the overdraft protection, I’ve never had to pay an overdraft fee again. Due in part to the fact that I don’t want the embarrassment of having my card declined. But hey, it’s a method that works 🙂 I also did what you suggested and linked my account to my checking in the event of an overdraft.

  • Mike

    Thanks for your hard work on this article. I included it in Tuesday’s Frugal News Review podcast.

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