The 15 Worst Bank Fees (And How to Avoid Them)
by Donna Wright:
In case you haven’t noticed, your bank may be charging you fees that you’re unaware of. If you’re not careful, those fees could add up while your account balance goes down.
Read the Fine Print or You’ll Pay
If you’re like me, you don’t take the time to read a bank statement until there’s an issue. I learned the hard way until I noticed that bank fees were making my account balance get even lower. In fact, according to Consumer Federation of America, banks collect billions in overdraft fees each and every year.
By reading the fine print on bank statements, you may notice the “free” checking and saving accounts that you opened a while ago, are no longer free. In addition to bank fees, you may also incur potential penalties as well.
Below are 15 common types of bank fees you could avoid paying.
1. Monthly Maintenance Fees
A monthly service fee is charged to a customer to keep the account open. Depending on the bank and the type of account, the fee can range from $5.00 to $35.00 or more. I was charged a $25 bank fee because my savings account (that I barely use) dropped below the required dollar amount.
I now avoid the fee by using my savings account to hold my emergency fund so it continually stays above the low balance requirements.
2. Overdraft Fees
I am no stranger to an occasional overdraft fee. This occurs when you spend more than you have in an account, resulting in what is referred to as an overdraft, or negative balance. Overdraft fees can cost as much as $30.00 to $40.00 so mistakes can add up.
This happened to me by not recording a check written in my checkbook register and not checking my balance before paying multiple bills at one time. I had enough money in my account to cover my monthly bills but forgot to consider the $300.00 check that I wrote for a wedding gift. The $35 fee felt like a punch in the gut. I now continually monitor my account balance and keep closer track on the miscellaneous checks written.
3. Insufficient Funds Fees
Insufficient funds, also known as nonsufficient funds, differ from overdrafts in that your account doesn’t drop to a negative balance. Instead, fees are incurred because a transaction is declined by the bank. These fees could cost $30.00 to $40.00 or higher. This happened to me when my SunPass toll was automatically declined by the bank. Not only did I have to update my payment method but the bank charged me $35.00 to do so.
While I could switch to a bank that doesn’t charge these fees, it’s much easier to track my account balances.
4. Stop Payment Fees
Every now and then, you mail a check that was not received by the recipient. Should the check be in the hands of the wrong person, you’d probably contact the bank to “Stop Payment.” What you may not know is that the bank typically charges you a fee from $30.00 to $35.00 to do so in order to prevent that transaction from going through.
Always confirm that you’re sending a check to the correct recipient at the correct address or opt to make online payments.
5. Returned Deposit Fees
Returned deposit fees are not your fault. You simply deposited a check presented to you and the person that wrote you the check had insufficient funds. That can cost you a fee of $25 to $50 and higher for the bad check.
Instead of receiving a check, ask for electronic payments or a guaranteed payment like cashier's checks or money orders.
6. Out of network ATM Fees
Using an ATM at your bank’s network will not cost a fee. However, using an out of network ATM may cost you $2.00 to $5.00 and higher. Even worse, the ATM owner can also charge you a fee, costing you a double payment. Also, be sure to see if your bank limits the amount of free ATM visits per month. I’ve shared my ATM fee story before. Aboard a Caribbean cruise, I needed cash. The ATM fee was $6.00!
I am very careful these days to use an ATM in my bank network, plan ahead to have cash on hand, or get cash back while grocery shopping.
7. Excessive Transaction Fees
I learned about excessive transaction fees the hard way. I used to make bank transactions often until I realized that the bank limits the number of free transactions. Typically a bank caps withdrawals to six per month. When you go over, you can expect to pay a fee of $2.00 to $15.00 per extra withdrawal.
It’s better to plan the anticipated need for cash so you can make less withdrawals each month.
8. Dormancy/Inactivity Fees
A dormancy fee, also known as an inactivity fee, occurs when there’s no activity on an account for a certain time period. This fee could cost you $5.00 to $25.00. To avoid these fees, monitor your accounts and close any that you don’t intend to use. Don’t let others sit for an extended period of time such as six to 12 months. Even a small bank deposit or using a debit card will keep the account active.
9. CD Early Withdrawl Fees
When you sign up for a Certificates of deposit (CDs), you are guaranteed higher interest rates and returns in exchange for leaving the money untouched for a set term such as one to five years. Should you break those terms early, you will incur early withdrawal fees that could equal between 3 to 12 months of interest, depending on the term you agreed to. Choose reasonable CD terms to eliminate the need for an early withdrawal.
10. Early Account Closure Fees
Some banks charge an early account closure fee if you close an account in the first 90 to 180 days. This fee, typically from $25.00 to $50.00, is intentionally charged to discourage you from opening an account just to take advantage of sign-up incentives. Therefore, open bank accounts with a long-term intention, or at least meet early closure conditions that apply.
11. Paper Statement Fees
While you may enjoy reading paper bank statements, you may not have noticed that you’re being charged for that convenience. That fee (covering printing and postage costs) could cost you $1.00 to $5.00. This is an unnecessary fee since you can read your statements on the bank website or app. Sign up for paperless electronic statements to not incur this charge.
12. Wire Transfer Fees
Wire transfer fees are incurred when a bank charges you for receiving funds via wire transfer domestically and internationally. These fees can range from $25 to $50 or more. I’ve used this service to wire the new house down payment from my bank directly to the closing agent. These fees range from $15.00 to $50.00 and higher. Do research to find a bank that will either waive the fee or offers a lower fee. You can also ask the payee for permission to use a money transfer app like Venmo, PayPal, or Zelle.
13. Foreign Transaction Fees
Foreign transaction fees are applied when travelling internationally or making payments to foreign sellers using a debit or credit card. These fees range from 1% to 3% of the transaction amount. This could cost you greatly if you’re traveling abroad. For example, if you spend $200, a 3% fee would result in a $6 charge on top of the purchase amount.
To avoid these fees, use a credit or debit card that does not charge foreign transaction fees. Also, plan ahead to have local currency, to avoid using a foreign ATM.
14. Checkbook fees
A checkbook fee may seem rare these days since most people don’t write paper checks but you must be aware that banks typically don’t provide free checkbooks anymore. Fees range from $15.00 to $35.00 purchasing checks from the bank. I order in bulk from third party check printer that not only offers low prices but they also offer many fun and unique check graphics.
15. Lost debit card replacement fees
Should you lose your debit card, let it be known that not all banks ship your replacement debit card for free. So, in addition to the inconvenience and frustration of not having the card, you could pay a fee from $5.00 to $15 for expedited delivery. A fee could also be charged if you request a replacement multiple times in one year.
I misplaced a debit card a week before a vacation and because of my work schedule, I couldn’t visit the bank branch in person. I had to pay for rush shipping. Like I now do, always be sure to place the card back in a secure place after each use.
Author: Donna Wright
Donna Wright is a content creator, blog writer, travel writer, and product reviewer, who enjoys researching, fact-checking, and expressing complex subjects in understandable terms.
Donna holds a Bachelor’s Degree in Communications that included studies in advertising, copywriting, public relations, economics, accounting, communications law, media studies, and strategical marketing.
As a single parent, Donna knows the pitfalls of poor money management but also knows the satisfaction of improving finances. Decades of experience, skills, and expertise qualify her to provide accurate, unbiased insights on this topic.
This article is for informational purposes only and does not constitute financial advice. Readers should verify all details independently and use their own judgment when following these practices.