Understanding and Avoiding Common Bank Fees
Many people figure that paying bank fees is simply an unavoidable part of life. Recent surveys say the average American shells out anywhere from $167 to $288 per year in fees. But take note: Some or even all of those may be avoidable.
For many financial institutions, fees are a way that banks make money. They can help cover the cost of being in business, and they can also cover situations that require more of their team’s time (say, dealing with an overdrafted account).
However, these charges can become expensive for many customers, and they can eat away at any interest earned. That can foil a customer’s efforts to grow their wealth.
Next, learn about the specific fees that many banks assess and how you can lower or avoid them.
1. Monthly Maintenance Fees
One of the most ubiquitous fees banks charge for checking and savings accounts is the monthly maintenance or service fee. This is a fee you pay each month to cover the cost of account management and customer service. These fees typically run between $5 and $15 per month and are usually automatically deducted from your account.
How to avoid monthly maintenance fees: Some banks offer account holders ways to get these monthly service fees waived. Common waiver requirements include: maintaining a certain minimum monthly balance, completing a certain number of debit card transactions per month, or receiving a specified amount of money via direct deposit for each statement period.
2. ATM Fees
Both traditional and online-only banks typically offer a network of ATMs where you can make deposits and withdrawals free of charge. If you deposit or withdraw money at an ATM outside your bank’s network, however, the bank will typically charge you am atm fee. On top of that, the owner of the ATM will likely also tack on a charge. On average, total combined ATM fees run close to $5.
How to avoid ATM fees: To reduce how much you could pay in ATM fees, planning ahead might help. You could research locations of in-network ATMs and only make withdrawals there. Or use an ATM that’s in-network to get cash before you go shopping or out to eat at a cash-only location so you don’t have to use whichever ATM is nearby.
Here’s another idea for avoiding ATM fees: Many grocery stores and some big box stores will let you get cash back when you make purchases there. This could be another way to circumvent ATM fees.
3. Overdraft Fees
The average overdraft fee runs around $27.
How to avoid overdraft fees: Many banks offer overdraft protection as an add-on service. If you choose to opt in, the bank will allow transactions to go through, even if you don’t have sufficient funds in your account to cover them. Depending on the type of overdraft protection you sign up for, the bank may lend you the money to cover the overage, or they may pull funds from a linked account. This can avoid NSF fees, late fees, and bounced check fees, but can trigger an overdraft fee.
Recommended: Overdraft vs. NSF Fees
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4. Nonsufficient Funds (NSF) Fees
Nonsufficient funds (NSF) fees, also known as insufficient funds or returned item fees, can occur when a bank declines to make an electronic payment or cash a check that would bring your checking account to a negative balance. Instead, the transaction gets denied or returned unpaid and the bank will typically charge you an NSF fee (also known as a returned item fee). The average NSF fee is currently around $20.
If you don’t opt in to have overdraft protection on an account, banks typically decline, or bounce, the transaction if there aren’t enough funds to cover a transaction.
Besides the problems associated with a bounced check (that is, the payee not getting their funds), there is typically a returned item fee, averaging around $30 for each occurrence. And, unfortunately, sometimes a returned item fee can take an account balance to the point where another check may bounce, causing the situation to become increasingly worse.
How to avoid nonsufficient funds fees: Many banks allow you to sign up for text alerts that let you know when your balance has fallen below a certain level. When you get the alert, you can avoid making a debit card purchase that will overdraw your account. You can also quickly transfer funds to cover any impending automatic payments or outstanding checks.
5. Wire Transfer Fees
If you use your checking account to send or receive a wire transfer, you’ll typically pay a wire transfer fee. Fees vary by institution, but they are usually at least $20 for domestic transfers and $35 or more for international transfers. Some banks don’t charge you for incoming wire transfers (when someone sends you money), but others charge a wire transfer fee whether you are sending or receiving funds.
| Checking Account Fee | Average Cost |
|---|---|
| Monthly maintenance fee | $5 to $15 |
| Nonsufficient funds fee | $20 |
| Overdraft fee | $26.61 |
| Out-of-network ATM fee | $4.73 |
| Paper statement fee | $2 per statement |
| International transaction fee | 1% to 3% of the transaction amount |
| Wire transfer fee | $20+ for domestic; $35+ for international |
|
Costs vary by institution. Checking accounts may also charge other fees, including account inactivity fees, early account closure fees, check ordering fees, and debit card replacement fees. Before opening a new bank account, always read the fee schedule closely. |
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How to avoid wire transfer fees: A few ideas on avoiding these fees, if your financial institution charges them: Ask your bank if they will waive the surcharge; in some cases, they may. Use a payment service like Zelle, or, if you often make and receive international payments, you might look into getting a multicurrency or foreign currency bank account.
6. Inactivity Fees
If you have a bank account that you don’t use often, you might get charged what’s known as an inactivity fee or a dormancy if it sits untouched for a while. There are varying state laws that specify when a bank must turn dormant funds over to the state, as a form of unclaimed funds. Dormancy fees try to trigger account holders into action so that this handoff of funds to the government doesn’t happen.
Inactivity fees can typically range from $5 to $20, and the amount of time that must elapse before they are assessed will vary.
How to avoid inactivity fees: To avoid these fees, it’s wise to only have as many accounts as you can frequently manage. If you have an account you barely use, it can be a smart move to close it and transfer any funds to an active account.
7. International Transactions Fees
If you travel outside of the U.S. and use your debit card to make a purchase or withdraw funds at an ATM, you may get hit with an international (or foreign) transaction fee. These fees are typically up to 3% of the purchase or withdrawal amount.
How to avoid international transaction fees: To help mitigate or avoid these bank fees (especially if you are a frequent traveler), you could check with your bank to see if it charges these fees. If it does, you might consider opening an account at a financial institution that doesn’t.
Also, perhaps your bank has affiliate banks in regions where you’re traveling, and you could withdraw from those ATMs without paying the additional international fees. You could also ask if your bank reimburses fees that you’ve paid.
You could exchange US dollars to foreign currency before you leave the country, perhaps eliminating the need for ATM withdrawals while traveling. Your bank might do this with no fees. However, then you do risk loss or theft of your funds.
Recommended: Can You Use Your Debit Card in Another Country?
8. Paper Statement Fees
Many banks have shifted to e-statements in an effort to reduce waste and save on printing and mailing costs. If you choose to receive paper statements for your checking account, you may get hit with a monthly surcharge, which is often around $2.
How to avoid paper statement fees: Switching to electronic statements can help you avoid monthly paper statement fees. Banks typically allow you to sign up for this option through their online banking platforms. If you prefer a paper format, you can always print out your e-statements.
How Are Checking Account Fees Changing Over Time?
Along with the rising cost of many consumer goods and services, many checking account fees have also increased in recent years. This includes monthly account maintenance fees and ATM fees, along with higher balances required to avoid the fees. But there is some good news: Two common checking account fees — overdraft and NSF fees — have been moving in the other direction.
According to Bankrate’s annual checking account and ATM fee study, the average overdraft fee in 2023 was $26.61, down 11% from $29.80 in the previous year. In that same time period, the average NSF fee dropped a full 25%, from $26.58 in 2022 to a record low of $19.94 in 2023.
Despite the drop in average amounts, overdraft and NSF fees are still charged by 91% percent of accounts and 70% of accounts, respectively, according to the survey.
The Takeaway
Many checking accounts charge fees for everything from keeping your account open to overdrafts to ATM usage. Fortunately, you can avoid many of these charges by keeping a certain minimum balance in your account, signing up for direct deposits, going paperless, or looking for a bank that charges lower, or no, fees for checking accounts.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQs
Are there fees for checking accounts?
Yes, checking accounts often come with various fees, including monthly maintenance fees, overdraft fees, ATM fees, and fees for paper statements or nonsufficient funds. These fees vary by bank and can add up over time if you’re not careful. Some banks offer fee-free checking accounts, but these might have specific requirements like maintaining a minimum balance or setting up direct deposits.
How do you avoid checking account fees?
You may be able to avoid or minimize checking account fees by:
• Maintaining the required minimum balance
• Signing up for direct deposit
• Using your debit card a certain number of times per month
• Using in-network ATMs
• Opting for electronic statements
• Setting up low-balance alerts (to avoid overdraft and nonsufficient funds fees)
• Choosing a bank that offers fee-free checking accounts
What is the most common checking account fee?
The most common checking account fees include:
• Monthly maintenance fees (these may be avoidable by keeping a certain minimum balance or signing up for regular direct deposits).
• Fees for using out-of-network automatic teller machines (ATMs)
• Overdraft fees
• Nonsufficient fund (NSF) fees
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SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
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