How to Avoid Common Banking Fees During the Holidays

The holiday season is often a time of increased spending, travel, and financial transactions, which makes it an easy period to fall victim to common banking fees. While these fees may seem small, they can add up quickly and eat into your budget. From ATM fees to overdraft charges, avoiding unnecessary fees is essential to making the most of your holiday spending and keeping your finances in check.

Here’s a guide on how to avoid common banking fees during the holidays and keep more money in your pocket.

1. Use In-Network ATMs

One of the most common banking fees, especially during the holiday season, is the ATM fee. When you use an out-of-network ATM, you could face fees from both the ATM owner and your bank, often totaling $3 to $5 per transaction. If you’re traveling for the holidays or shopping in unfamiliar areas, it can be easy to accidentally use an out-of-network ATM.

How to Avoid ATM Fees:

• Stick to your bank’s ATMs: Make sure to use in-network ATMs associated with your bank to avoid surcharges. Many banks have ATM locators in their mobile apps to help you find nearby machines.
• Use no-fee ATM networks: Some banks, especially online banks, are part of nationwide ATM networks like Allpoint or MoneyPass, which provide access to thousands of fee-free ATMs across the country.
• Withdraw cash ahead of time: If you know you’ll need cash, withdraw a sufficient amount from a fee-free ATM before you start your holiday shopping or travel. This reduces the risk of needing to make frequent withdrawals from out-of-network ATMs.

By planning ahead and using in-network ATMs, you can avoid the frustration of paying unnecessary fees for cash withdrawals.

2. Set Up Low Balance Alerts to Avoid Overdraft Fees

With holiday expenses piling up, it’s easier than usual to overspend or miscalculate your available balance, which can lead to costly overdraft fees. Many banks charge an average of $30 to $35 for each overdraft, and if you don’t catch it in time, you could face multiple fees in a short period.

How to Avoid Overdraft Fees:

• Set up low balance alerts: Most banks offer alerts that notify you when your account balance falls below a certain threshold. Set up these alerts to get a text or email when your balance is getting low, allowing you to deposit funds or transfer money before overdrawing your account.
• Link to a savings account: Many banks allow you to link a savings account to your checking account for overdraft protection. If your checking account balance goes below zero, the bank will automatically transfer money from your savings to cover the difference, typically without an overdraft fee.
• Opt out of overdraft coverage: If you want to avoid overdraft fees entirely, you can opt out of overdraft protection for debit card purchases. This means that if you don’t have enough funds in your account, the transaction will simply be declined rather than overdrawing your account and triggering a fee.

Being proactive with alerts and overdraft protection can save you from unnecessary fees and help you manage your holiday spending more effectively.

3. Avoid Foreign Transaction Fees While Traveling

If your holiday plans include traveling internationally, you may face foreign transaction fees on purchases made outside the U.S. Many banks charge a foreign transaction fee of 1% to 3% on every purchase made with your debit or credit card while abroad. These fees can quickly add up if you’re traveling for an extended period.

How to Avoid Foreign Transaction Fees:

• Use a no-foreign-transaction-fee card: Many credit cards, especially travel-focused ones, offer no foreign transaction fees. Before your trip, check if your current card charges this fee. If it does, consider applying for a card that doesn’t charge extra for international purchases.
• Notify your bank before traveling: Alert your bank or credit card issuer of your travel plans to avoid any unnecessary disruptions in service. Many banks will freeze accounts if they see unexpected foreign activity, which could leave you without access to your funds.
• Use local currency: When making purchases abroad, always opt to pay in the local currency rather than U.S. dollars. Many merchants or ATMs will offer to convert your purchase to dollars, but they often charge a poor exchange rate and add hidden fees. Paying in the local currency typically gives you a better exchange rate from your bank.

Planning ahead for foreign transaction fees can save you money and make international travel more affordable during the holidays.

4. Keep an Eye on Maintenance and Inactivity Fees

Some banks charge monthly maintenance fees or inactivity fees if you don’t meet certain requirements, like maintaining a minimum balance or using your account regularly. During the busy holiday season, it’s easy to overlook these fees, especially if you have multiple bank accounts.

How to Avoid Monthly Maintenance and Inactivity Fees:

• Meet minimum balance requirements: Many banks waive monthly maintenance fees if you maintain a certain minimum balance in your checking or savings account. Be aware of the balance threshold required to avoid fees, and make sure your account meets that requirement during the holidays.
• Set up direct deposit: Another way to avoid monthly maintenance fees is to set up direct deposit for your paycheck. Many banks waive fees for accounts that receive a direct deposit each month, no matter the balance.
• Use your account regularly: If you have accounts that you rarely use, such as an extra savings account, check for any inactivity fees. Some banks charge a fee if you don’t make any transactions in the account for a set period, typically six months or more. Make a small deposit or withdrawal to keep the account active and avoid the fee.

By staying on top of your account activity and balance requirements, you can avoid fees that may go unnoticed during the holidays.

5. Use Credit Cards Strategically to Avoid Interest Charges

Credit card spending tends to increase during the holiday season, making it more likely that you’ll carry a balance into the new year. If you don’t pay off your balance in full, you’ll incur interest charges on the remaining amount, which can add up quickly. The average credit card interest rate is around 15% to 25%, making it costly to carry debt from month to month.

How to Avoid Credit Card Interest Charges:

• Pay off your balance in full: The best way to avoid interest is to pay your credit card balance in full each month. If you can’t pay the full amount, try to pay as much as possible to minimize interest charges.
• Use a 0% APR card: If you anticipate carrying a balance for a few months, consider using a credit card that offers 0% APR on purchases for an introductory period, often 12 to 18 months. This allows you to make purchases during the holidays without accruing interest as long as you pay off the balance before the promotional period ends.
• Pay more than the minimum: If you’re unable to pay off your balance in full, make it a priority to pay more than the minimum payment. This reduces the overall interest you’ll owe and helps you pay off the debt faster.

Using credit cards strategically during the holidays helps you avoid interest charges and keeps your debt manageable.

6. Avoid Excessive Wire Transfer Fees

If you plan to send money to friends or family during the holidays, be aware that wire transfers can come with hefty fees, especially for international transfers. Domestic wire transfers typically cost $15 to $30, while international transfers can cost $30 to $50 or more.

How to Avoid Wire Transfer Fees:

• Use free money transfer services: Many banks and apps now offer free or low-cost ways to send money, such as Zelle, Venmo, or PayPal. These services allow you to transfer money to friends and family instantly without incurring a fee.
• Check for free wire transfer options: Some banks offer fee waivers for certain account holders, such as premium account customers. If you need to make a wire transfer, check with your bank to see if you qualify for a free or discounted rate.

By opting for free or low-cost money transfer services, you can avoid the high fees associated with traditional wire transfers.

Final Thoughts

The holiday season is filled with opportunities to overspend, but you don’t have to let banking fees cut into your budget. By using in-network ATMs, setting up alerts to avoid overdrafts, and being mindful of interest charges and foreign transaction fees, you can keep your finances in check during the busiest time of the year.

Planning ahead and automating aspects of your financial management will help you navigate the holidays without worrying about unnecessary fees, allowing you to focus on what matters most—enjoying the season with friends and family.