Banking fees are frustrating…and often unfair. Here’s how to determine your financial institution’s potential charges…and avoid paying them.

Request disclosure. Banks are required by the Truth in Savings Act to disclose all fees. Never open an account without a thorough review of the fees. For existing accounts, check the bank’s website for a fee disclosure or call to request a mailed copy.

The increase in online, no-fee “neo-banks” has forced traditional banks to offer free accounts. These days, “free” really means “fee-less,” so the easiest way to avoid fees is to open a free account (you will pay a fee only if you insist on paper statements). Beware: Some banks won’t charge fees if you use direct-deposit…but if you lose your job—and direct deposit—you will get hit with fees. Choose a truly free account.


Types of fees

Overdraft protection ($25 to $35). This kind of protection can be harmful. Say you overdraw by purchasing a $3 cup of coffee. Thanks to overdraft protection, your card isn’t declined—but you will pay a $30 fee, so your coffee just cost $33! To avoid this fee: Decline this opt-in “protection,” and make sure you don’t overdraw your account.

Maintenance ($10 to $17) and minimum balance (about $5) fees. Some banks charge you just for having an account or penalize you for not keeping enough money in that account. Close any accounts that impose such fees.

ATM fees. If you use an ATM outside your bank’s network, you could get smacked by a double-whammy—the ATM’s owner and your bank both may charge you (the combined total averages $4.50). To avoid this fee: In an emergency, sure, bite the bullet…but if there’s room for planning, never use any ATM that isn’t owned by your bank. Note: Several brokers offer cash-management accounts that are similar to checking accounts with debit cards and ATM access. Fidelity’s Cash Management account offers ATM fee reimbursements. Wealthfront’s Cash Account offers free ATM usage at a network of ATMs. Wealthfront does not reimburse out-of-network ATM fees.

Excessive transaction fees ($3 to $15). Prepandemic, banks were required to limit savings-account withdrawals to six per month—and you were charged for making more than that. But the Fed has relaxed that requirement. To avoid this fee: Learn your bank’s policy. Be careful if you have an overdraft-transfer arrangement whereby checking overdrafts are covered by automatic transfers out of savings. Those transfers count toward your transaction tally.

Early account closing fees (about $25). Many banks require you to keep an account open for a specified period (usually three or six months). To avoid this fee: Wait to close the account until it has been open long enough to avoid this fee.

Inactivity fees ($5 to $20). Imagine that you open an online savings account at a good rate. You make one deposit, then the rate drops and you stop depositing there. After six months or a year, you begin to incur inactivity fees. To avoid this fee: Watch out for fee changes—and close accounts before inactivity fees kick in.

Returned-deposit fees (about $13). These fees hit when you deposit a check that bounces. To avoid this fee: Make sure you trust the entity that wrote the check, and don’t hang onto a check for months before banking it.

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