5 sneaky bank fees and how to catch them

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Just like most businesses, banks are on a mission to maximize their profits. Bank fees allow them to do so with minimal effort. Unfortunately, these fees can catch you by surprise. And those extra charges that show up on your monthly account statement can take a bite out of your hard earned money.

By being aware of the various bank fees out there and understanding what you need to do to avoid them, you can save a lot of cash. Here’s a close look at some of the most common sneaky bank fees.

1. Overdraft/insufficient funds fee

If you’re enrolled in overdraft protection and withdraw more than your available balance from your checking account, your bank will cover the difference but then charge you a sizable overdraft fee. The average overdraft fee is $33.36, according to Bankrate’s 2019 checking account and ATM fee study. In the event your account doesn’t come with overdraft protection, the transaction won’t go through and you’ll get hit with an insufficient funds fee. This will happen even though the money never left your account.

Aside from always making sure you have adequate funds in your account to cover any withdrawals, bills you pay or checks you write, the best way to avoid these two pesky fees is to open an account that doesn’t charge them.

“Today, there are quite a few checking accounts on the market that don’t charge overdraft or insufficient funds fees,” says Chris Hutchins, CFP and head of autonomous financial planning at Wealthfront. “Choosing a bank that offers them is the best way to avoid these types of fees.”

2. Monthly maintenance fee

Many banks charge a maintenance fee each month to cover the upkeep they perform to keep your accounts operating smoothly. The average monthly service fee for non-interest checking account holders is $5.61, according to Bankrate’s study.

But there are ways to avoid getting dinged each month. One way is to maintain the required minimum balance. Another way is to set up a recurring direct deposit to your account.

“Before you choose a bank account, find out whether you’ll be on the hook for a monthly maintenance fee,” says Michaela McDonald, CFP and financial advice expert at Albert.

“If you will, determine if the bank has certain qualifications you can meet to waive it going forward.”

Bank of America, for example, will waive your maintenance fee if your bank account has at least $1,500 at all times. U.S. Bank won’t charge a maintenance fee if your direct deposits total over $1,000 per month.

3. ATM fee

If you use an ATM that is outside of your bank’s brand or partner network, you’ll likely be charged an ATM fee. The exact amount varies by bank but you can expect a few dollars for each withdrawal transaction. The average ATM surcharge last year was $3.09, reaching a record high for the 15th straight year, according to the 2019 Bankrate study.

Make sure you’re informed of any ATM fees before you open a new bank account. You may want to opt for a bank that prides itself on offering unlimited ATM fee rebates. If you’re satisfied with your current bank and want to avoid ATM fees, only withdraw cash from their ATM. “You may also find other ATMs that won’t charge you by using the “ATM Locator” tool on your bank’s app,” explains McDonald.

4. Paper statement fee

Chances are your bank has encouraged you to go paperless with your monthly statements so they can save some money on paper and postage costs. “Some banks charge between $1 and $5 per month just to send you a hard copy of your monthly statements,” says Hutchins.

If you’re banking with a financial institution that sends paper statements, make sure you sign up for the paperless option to avoid the paper statement fee.

5. Excess activity fee

Until April 24, 2020, the Federal Reserve’s Regulation D limited the amount of withdrawals and transfers you could make from any savings or money market account to six. The Fed decided to suspend this rule to make it easier for people to access their savings during the coronavirus pandemic.

“For years, traditional banks have charged fees for exceeding this limit and it’s likely excess activity fees will return once we are through this pandemic,” Hutchins says. “Depending on your bank, excess activity fees may cost as much as $15 per transaction.”

The best way to avoid this fee is make sure all your bills come out of your checking account. It’s also helpful to plan for any expenses that would require you to withdraw or transfer from your savings account. This way you can make sure you don’t go above the transaction limit. Another option is to move your money to a high-interest checking account so that you enjoy the best of both worlds: high interest without any excess activity fees.

Bottom line

Bank fees can catch you off guard and cost you money if you’re not careful. That’s why it’s essential to be cognizant of these costs and do your best to avoid or reduce them. If you get charged with a bank fee and are unsure of what it is or believe you’re not responsible for it, don’t hesitate to reach out to your bank for an explanation.

Featured image by Irina Soboleva S of Shutterstock.

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