BANK FEES GET A BAD rap. And perhaps rightly so.
They are pricey, pesky and often designed to catch you off guard when you can least afford them. Checking and savings account fees can add to the cost of closing a bank account or force a low account balance into the negatives.
So what bank fees should you be looking out for? And how can you avoid them if your bank levies these fees? Here are seven annoying bank fees and how to avoid them.
- Overdraft fees
- Monthly maintenance fees
- Paper statement fees
- Account closure fees
- Inactivity or escheatment fees
- Card replacement fees
- Returned item fees
Read on for more information on each pesky upcharge.
Banks levy this fee when consumers withdraw more from an account than is available. For example, a $150 transaction on an account that holds just $100 may trigger an overdraft charge.
“It’s a regressive fee,” says Peter Smith, senior researcher for the Center for Responsible Lending. “It charges more money to people who can less afford it.”
An overdraft fee typically costs around $35, but the total price of overdrawing an account can increase if it takes the banking customer multiple days to restock their account. For example, if a PNC Virtual Wallet account is overdrawn for more than five days, PNC customers pay a daily additional $7 fee (up to $98) on top of the $36 overdraft fee.
How to avoid it: The good news is that banks are required to ask customers to opt in to the overdraft service when they sign up for a new account. Savvy consumers will opt out. “Not opting in to this service is the best way to make sure you’re not penalized for having a lower balance than you thought,” Smith says. Without this service, overdrawn transactions may be declined, but the brief embarrassment may be preferable to a pricey fee.
Keep in mind that not opting for this fee may only protect you if you overdraw on ATMs or during one-time debit card transactions, says Simon Zhen, research analyst at MyBankTracker.com. If you overdraw through a recurring bill payment, you may still get hit with the charge.
To avoid the fee in these situations, consider signing up for overdraft protection via automatic transfers from your savings to your checking account when your balance is low. You may pay a transfer fee, but it could be about $12 or $13, still less than the overdraft fee, Zhen says. A line of credit or linked credit card may also cover over-withdrawals with a smaller fee or cheaper interest charge. Also make sure to set up low-balance alerts on your phone or banking apps that let you know when your account is nearing zero.
Monthly Maintenance Fees
Banks typically charge these to maintain your account. For example, Bank of America charges a $12 per statement cycle maintenance fee on its Advantage Plus banking account. Chase Bank charges a $12 monthly service fee on its Total Checking account.
How to avoid it: These fees are typically avoidable if you meet certain terms, such as carrying a large balance or automatically depositing a check each month. When shopping for a bank account, consider whether you can meet these requirements to avoid the fee. Don’t forget to consider online banks, which levy this upcharge less frequently.
Paper Statement Fees
The idea of paying extra to view a paper statement may have seemed strange 10 or 15 years ago, but today this charge is increasingly common. Expect to pay $2 to $3 to receive a paper bank statement, Zhen says.
How to avoid it: The best way to dodge this fee is to get on board with receiving your bank statements online. If you’d still like a print copy, consider printing on a home printer for a lower-cost alternative. Not receiving a paper statement in the mail should have the added benefit of reducing the chances fraudsters can steal your personal information by raiding your mailbox or recycling bin.
Account Closure Fees
This fee shouldn’t be an issue if you’re loyal to your bank. But if you’re closing a bank account quickly, typically within 90 to 180 days of opening it, you may get hit with this fee of around $25. The fee is designed to discourage people who are signing up for bank accounts solely to take advantage of new-customer bonuses, Zhen says.
How to avoid it: Keep your account open beyond the cutoff to dodge this charge.
Inactivity or Escheat Fees
This fee may be charged if you don’t interact with your bank account for a certain amount of time, typically one to two years. The bank may take an escheat fee of about $50 before transferring those assets to the state treasury.
How to avoid it: Keep your accounts live by logging in regularly, writing checks or paying for transactions from your bank account. Open any mail from your bank. It may be trying to alert you to the fact that your accounts are inactive.
Card Replacement Fees
Your bank may charge you if you ask to replace a debit card before it’s expired. For example, at Bank of America, some customers pay $5 for a nonexpired ATM or debit card. They’ll pay an extra $15 if they need rush delivery. At PNC, consumers may pay $7.50 for each replacement card and $25 for expedited shipping.
How to avoid it: If you lose or have a card stolen, there’s not much you can do to dodge the replacement fee. But keep a backup debit or credit card on hand so that you save on shipping.
Returned Item Fees
Like an overdraft fee, a returned item charge occurs when your bank doesn’t have sufficient funds to support a transaction, typically a check, and has to “return the item.” Expect to pay around $35 for each returned item fee.
How to avoid it: Keep careful tabs on your checking balance to avoid over-withdrawal. Set up low-balance alerts on your mobile banking app.
The bottom line: Keep an eye on these fees when switching banks, experts say. Says Smith, “People should, as much as they can, look past the branding and marketing of the institution and look at the real-deal factors that affect them.”