How to Avoid Common Bank Fees and Save Money

Bank fees can feel like a frustrating drain on your hard-earned money. From monthly maintenance charges to ATM fees, these costs can add up quickly if you’re not careful. The good news is that many of these fees are avoidable with a little knowledge and planning. Here’s how to steer clear of common bank fees and keep more money in your pocket.

Choose the Right Bank Account

The first step in avoiding bank fees is selecting the right account for your needs. Not all bank accounts are created equal—some come with hefty fees, while others offer more flexibility. When choosing a bank, consider the following:

• No-Fee Accounts: Look for banks that offer checking or savings accounts with no monthly maintenance fees. Many online banks, credit unions, and even some traditional banks offer fee-free options.
• Low Minimum Balance Requirements: Some banks waive monthly fees if you maintain a minimum balance. Make sure the required balance is something you can comfortably maintain.
• Student and Senior Accounts: If you’re a student or a senior, ask about special accounts designed for you. These accounts often have lower fees or no fees at all.

By choosing an account that aligns with your financial habits, you can avoid unnecessary fees from the start.

Keep an Eye on Your Balance

Overdraft fees are one of the most common (and expensive) bank fees. These fees occur when you spend more money than you have in your account, and the bank covers the difference. To avoid overdraft fees:

• Set Up Alerts: Many banks offer account alerts that notify you when your balance falls below a certain threshold. Set up these alerts to stay informed and avoid spending more than you have.
• Link Accounts: If your bank allows it, link your checking account to your savings account. This way, if you’re about to overdraft, the bank can transfer money from your savings to cover the difference, often for a much smaller fee or no fee at all.
• Opt Out of Overdraft Protection: While it sounds helpful, overdraft protection can lead to more fees. If you opt out, transactions that would cause an overdraft will be declined, saving you from paying a fee.

Avoid Out-of-Network ATMs

ATM fees can sneak up on you, especially if you frequently withdraw cash from machines outside your bank’s network. These fees can include charges from both your bank and the ATM owner. To avoid ATM fees:

• Use In-Network ATMs: Stick to ATMs within your bank’s network. Most banks offer a locator tool on their website or mobile app to help you find nearby ATMs.
• Withdraw Extra Cash: If you know you’ll need cash, withdraw a little extra when you’re at an in-network ATM. This way, you won’t need to make multiple withdrawals and risk using an out-of-network machine.
• Choose a Bank with ATM Reimbursement: Some banks, particularly online banks, reimburse you for out-of-network ATM fees up to a certain amount each month. If you frequently use ATMs, this feature can save you a lot of money.

Be Strategic with Your Savings

Savings accounts can come with fees if you’re not careful. Common fees include those for excessive withdrawals or failing to maintain a minimum balance. To avoid these charges:

• Know the Withdrawal Limits: Federal regulations typically limit savings account withdrawals or transfers to six per month. Keep track of your transactions and avoid exceeding this limit to avoid fees.
• Maintain the Minimum Balance: If your savings account requires a minimum balance to avoid fees, make sure you stay above that threshold. If you can’t maintain the balance, consider switching to an account with no minimum requirement.
• Consider a High-Yield Savings Account: High-yield savings accounts, often offered by online banks, typically have no fees and offer better interest rates. This allows your money to grow faster without worrying about fees.

Watch Out for Inactivity Fees

Some banks charge inactivity fees if you don’t use your account for a certain period, typically six months to a year. To avoid inactivity fees:

• Set Up Automatic Transactions: Even if you don’t use the account frequently, setting up a small automatic deposit or withdrawal each month can keep it active and prevent fees.
• Close Unused Accounts: If you have accounts you no longer use, consider closing them to avoid inactivity fees and simplify your finances.

Leverage Direct Deposit

Many banks waive monthly maintenance fees if you set up direct deposit. This can be a simple way to avoid fees without changing your banking habits. If your employer offers direct deposit, take advantage of it to meet your bank’s fee waiver requirements.

Be Aware of Foreign Transaction Fees

If you travel internationally or make purchases from foreign merchants, you might encounter foreign transaction fees. These fees typically range from 1% to 3% of the transaction amount. To avoid them:

• Use a No-Fee Credit Card: Some credit cards don’t charge foreign transaction fees, making them a better option for international purchases.
• Choose the Right Bank Account: Some banks offer accounts specifically designed for frequent travelers, with no foreign transaction fees or ATM reimbursement for international withdrawals.

Keep an Eye on Hidden Fees

Banks sometimes charge fees for services you might not even be aware of, such as paper statements, expedited payments, or account transfers. To avoid these:

• Go Paperless: Many banks charge for paper statements but offer electronic statements for free. Switching to paperless statements can save you a few dollars each month.
• Plan Ahead: Avoid expedited payment fees by paying bills on time and setting up automatic payments when possible.
• Read the Fine Print: Always read your bank’s fee schedule carefully to understand what services might incur fees and how to avoid them.

Final Thoughts

Avoiding common bank fees doesn’t have to be difficult. By choosing the right bank account, keeping track of your balance, and being strategic with your transactions, you can keep your money where it belongs—in your pocket. Remember, a little awareness and planning can go a long way in minimizing fees and maximizing your savings. So, take control of your banking habits today, and enjoy a fee-free financial future.