Table Of Content
The primary purpose of this article is to look into the details of the 10 common bank fees. The secondary purpose of this article for its readers is to understand how they can limit these charges or avoid them altogether.
The following analysis is based on general banking practices and is not specific to any one bank. Moreover, it also includes information regarding different frequently asked questions that can help understand the different kinds of fees that bank charges in different scenarios. Let’s jump into it!
1. Account Maintenance Fees
Most banks, particularly brick-and-mortar ones, charge monthly account maintenance fees. The cost can be about $5 generally. Sometimes, the fee could be higher for additional services like higher interest rates, special alerts, etc.
However, in some banks, these fees could be waived completely upon meeting certain requirements like maintaining a minimum balance or making a certain number of monthly transactions.
How to Avoid Account Maintenance Fees?
One way to avoid monthly fees could be by meeting the requirement of maintaining your account as defined by the bank. You can get this information when signing up for the account.
Another way to avoid monthly fees is by choosing an online bank. Many online banks do not charge monthly fees due to their low expenses compared to physical banks.
These are monthly maintenance fees for 10 major bank accounts in the U.S.:
Bank/institution | Monthly Fee | Bank Type |
|---|---|---|
Bank of America Advantage Plus Checking | $12
can be waived by maintaining an account balance of $1,500, qualifying deposit of $250+ per month or enrol in Preferred Rewards
| Traditional |
Chase Total Checking® | $12
Can be waived if you maintain a $1,000 minimum daily balance, making direct deposits or Associated SnapDeposits of $500 or more per statement cycle, or holding $2,500 in combined deposit accounts with the same statement cycle date or having a Health Savings Account or investment account
| Traditional |
Citi Checking Account | $12
Can be waived if you make one qualifying direct deposit and one qualifying bill payment per statement period, maintain a combined balance of $1,500 per month across your eligible accounts or if you’re aged 62
| Traditional |
PNC Standard Checking | $7 – $25 per month
can be waived if you maintain $500+/$2,000/$5,000 direct deposit per month, $500+/$2,000/$5,000 monthly balance in savings or age 62+/$10,000 in all PNC consumer deposit accounts/$25,000 in all PNC consumer deposit accounts/
| Traditional |
U.S. Bank Checking | $6.95
Can be waived by maintaining an average account balance of $1,500, have $1,000+ in direct deposits per month or be aged 65+
| Traditional |
Wells Fargo Everyday Checking | $10
Related to Wells Fargo Everyday Checking. The fee can be waived if you maintain a minimum daily balance of $500 or receive at least $500 in qualifying direct deposits per month. The fee is also waived if you’re 17 to 24 and have a linked Wells Fargo Campus Debit Card or Campus ATM card linked to the checking account
| Traditional |
Capital One 360 Checking | $0 | Online Only |
Amex Rewards Checking | $0 | Online Only |
SoFi Bank | $0 | Online Only |
2. Overdraft Fees
Overdraft refers to the fees the bank charges to cover the transaction more than your available amount. Usually, banks charge a flat fee for every transaction you make while you have a low amount.
It seems a savior from the embarrassment that you would face if the transaction got declined by the bank. However, this feature comes with a cost.
How to Avoid Overdraft Fee?
Here are the two common methods to avoid overdraft fees:
- Setting digital alerts: To prevent your balance from getting too low, you can set up alerts via online banking that will notify you when your balance has reached your predefined limits.
For example, you can receive an email or text (or both) when your balance drops below, supposedly $50. This way you would be safe from making purchases with a low amount in your account.
- Linking with your savings account: This is the case when you don't want your transactions to be declined by the bank. This can be done by linking your checking account to another account to cover the transaction amount and prevent you from getting an overdraft.
So, when you have an overdraft, the money is withdrawn from your savings account instead of leaving your checking account in the red. However, this also involves a transaction fee, which is usually lower than the flat overdraft fee.
These are overdraft fees for major financial institutions in the U.S.
Bank/Institution | Overdraft Fee |
|---|---|
Chase | $34 |
PNC Bank | $36 |
Bank of America | $10 |
Capital One | $0 |
Wells Fargo | $34 |
Discover | $0 |
Citibank | $0 |
US Bank | $36 |
TD Bank | $35 |
3. Account Inactivity Fees
Banks charge an inactivity fee when an account stays dormant for a longer period. Such inactive accounts are difficult to manage for the banks from an administrative point of view.
The government regulations about using funds from such inactive accounts make it more difficult for the banks to manage them.
To encourage the account holders to keep their accounts active, banks have come up with the idea of charging an account inactivity fee.
Usually, a bank waits for 6 months or longer before charging this fee. Some banks prefer informing the account holder before charging the fee, while others charge it immediately.
How to Avoid Inactivity Fees?
Usually, such a long duration of account inactivity occurs when the user has shifted to another account. If you want to keep such accounts and save yourself from this expense, too, you can schedule some recurring deposits to the account to circumvent the inactivity policy of your bank. You can check its website to know more about your bank’s policy on dormant accounts.
Another effective way to eliminate this account expense is to close the account you do not wish to use anymore.
4. Fees for Insufficient funds
When you are not signed up for an overdraft protection program from your bank, you may be charged an insufficient funds fee when your transaction is declined due to a lower amount than required.
Banks usually deduct these charges to maintain quality standards and to meet infrastructure expenses.
How to Avoid Insufficient funds Fee?
Setting digital alerts is one of the most effective ways to stay updated about your account. It will help you to avoid making purchases when you have a low amount in your account.
Another effective way to avoid this expense is to signup for your bank overdraft protection program. However, this is not an effective way of limiting this expense, but if you are tight on your schedule and don’t have the time to monitor your account daily, this could save you.
5. Third-party ATM Fees
While it may seem convenient to use any ATM when you are on a walk, If that ATM is not in your bank’s network, you may end up paying up to $8 for every transaction. This may not sound good from a consumer’s perspective, but keeping ATMs running all around takes cash, which its users must pay.
The rise of peer-to-peer payment apps is another reason for such high ATM charges, as the demand for ATM usage is not there, but utility expenses remain the same.
How to Avoid ATM Fees?
Using your bank’s ATMs can save you from this extra expense. This may require a bit of money management, but you can save some extra bucks to buy a couple of McDonald’s Happy Meals at the month's end. You can use your bank’s mobile application to locate ATMs on your bank’s network.
With the rise of digital peer-to-peer payment apps, going cashless is not that difficult. You can get all the services like getting a haircut or paying for groceries by using these digital wallets, so you don't have to withdraw money from an ATM.
Just make sure to check it prior so that the seller can accept your preferred payment method.
6. Cross Border Transaction Fees
Cross-border transactions are becoming common due to growing international trade and a boost in travel and tourism.
A bank user can do two types of international transactions:
- Using a Debit card outside the country: Bank users may have to pay additional charges when they use their Debit cards outside the country. Major card service providers like VISA and MASTERCARD provide vast international coverage where users can make transactions. However, this transaction would involve a fee of up to 1% of the transaction plus any other third-party charges.
- Using ATM Services in other countries: This service can be used to get cash in the local currency you are visiting. However, this also involves some transaction and third-party charges.
How to Avoid It?
The best way to completely avoid this expense is by properly planning your trip expenditures and making arrangements for them before leaving your country.
You can keep some extra cash that you can exchange through local currency exchangers in the country you visit.
7. Transaction Fees
This fee is usually related to savings and money market accounts. These accounts come with a cap on the monthly transactions and the amount available for withdrawal.
So, an additional transaction fee would be charged whenever a user exceeds the predetermined quota.
How to Avoid It?
Thanks to the tough competition between the banks offering savings accounts, you can find one that better suits your needs. Some banks have removed the fee altogether, whereas others offer an increased number of monthly transactions. You can check with your bank the schedule of charges for the specific account you are willing to use.
Another effective way to limit this expense is to ensure that your checking account always has available funds that you can use for your day-to-day transactions. After all, a savings account is not meant to use often.
8. Fees for Wire Transfers
Wire transfer is a great option people often use to send money across borders as it is fast and does not involve handling cash. This can be done between the two banks or transfer agencies and the bank. Transfer agencies like Western Union have a vast presence globally.
However, using a wire transfer comes with a cost that needs to be paid by the initiator up front to the initiating bank or transfer agency. This cost depends on several factors, but you can expect to spend between $10 and $50 per wire transfer.
How to Avoid Wire Transfer Fees?
Try to find other cheaper peer-to-peer options like electronic wallets, which offer the flexibility to send money across the world without involving too many intermediaries.
There are several services like PayPal, Revolut, and Payoneer that offer you almost free transfer services between the users of the platform.
Here's a table summary of major financial institutions' wire transfer fee prices:
Financial Institution | Incoming Domestic Wire Transfer Fee | Outgoing Domestic Wire Transfer Fee |
|---|---|---|
Chase Bank
| $0 – $15 | $25 – $35 |
Citi
| Up to $15 | Up to $25 |
Capital One
| Up to $15 | Up to $30 |
Synchrony Bank
| $0 | $25 |
Discover Bank
| $0 | $30 |
Wells Fargo | $15 | $30 |
Ally Bank
| $0 | $20 |
Bank Of America
| $15 | $30 |
PNC Bank | $15 | $25 – $30 |
U.S. Bank | $20 | $30 |
TD Bank | $15 | $30 |
9. Fees for Paper-Based Statements
Getting the monthly bank statements in your mailbox at the end of every month was an effective way to monitor all your transactions 20 years back. Banks still provide this service, but as with all services, this too takes some cost.
With internet banking widely used among most consumers, getting a paper-based statement doesn’t make any sense. Internet banking gives 24/7 access to the user of their account activity.
How to Avoid The Fee?
The best way to eliminate this expense is simply opting for the e-statements or checking your account activity through online banking. You can log in to your bank account and get the account statement on your own. You can then print this statement if there is any need.
10. Processing Fee for Lost Debit Card
A lost debit card can be a menace for you on many levels. Besides proactively blocking the card before someone attempts to buy anything from it, you need to order a replacement card too.
Ordering a replacement card is quite a swift process because of online banking, but it comes with a cost. With an express delivery option, you may find yourself paying around $5 to $30.
How to Avoid It?
The best way to keep yourself safe from this extra expense is to stick to your original card and protect it as you would protect your wedding ring.
The second option to limit this expense is not opting for express delivery.
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FAQs
Bank charges overdraft fees as compensation for the risk they are taking by allowing consumers to spend they don’t own.
The fact that a user doesn’t have to face the embarrassment of transaction denial at the merchant takes some extra effort, hence the cost.
Most online banks offer checking accounts with no monthly maintenance fee. For example:
- Marcus
- Capital Bank
- Discover
- Axos Bank
- Chime
Some traditional banks do charge monthly maintenance fees, but also provide easy-to-achieve incentives to get the fee waiver. They are:
- Bank of America
- Wells Fargo
- Citibank
- Chase
- Ally Bank
Usually, when the bank decides to cover a transaction that would otherwise not be completed through your available amount, it charges an overdraft fee and completes the transaction.
Yes, almost all types of accounts at Chase have some monthly maintenance fees. However, the bank offers some ways to waive this fee, like keeping a certain minimum amount in your account.
Like other banks, Citi also charges the overdraft fee when covering the transaction. Currently, the bank charges $33 for every overdrawn transaction.
Typically, all banks charge a fee for Cashier's checks. Depending on the bank, this fee could be around $10 to $15.
Some banks provide the benefit of waiving this fee to their account holders upon meeting certain requirements.
Usually, closing a checking account, saving account, or money market account does not cost you anything. However, closing a Time-deposit account earlier than the maturity date may cost you an early withdrawal penalty.
All your bank fees are tax deductible if you have a business account. There is no such option for personal accounts.
