How to Avoid Paying Bank Fees Once and For All

January 16, 2020
posted on 10-03-2019

Rich or poor, chances are you are paying too much in bank fees. A Bankrate survey of 1,000-plus Americans found that those with household incomes of $30,000 per year or less paid an average of $31 per month in bank fees -- that's $372 per year that might as well be thrown in the trash. Meanwhile, those with higher incomes paid one-third as much in fees, but that's still $108 per year they could be plunking into their retirement account or using toward something more fun.

Fortunately there is good news: You don't have to pay hundreds of dollars in bank fees every year. In fact, as someone who worked almost a decade in the retail banking industry, I can confidently tell you that with a little simple planning and insider bank knowledge on your side, you can avoid paying bank fees once and for all.

Here are three insider tips on how to avoid some of the most common bank fees: 

1. How to Avoid ATM Withdrawal Fees and Charges

The best way to avoid paying ATM withdrawal fees -- which average more than $4 per transaction according to a recent Bankrate survey -- is to only take out cash from machines that are branded with your bank or credit union's name, which usually don't charge at all for transactions. Taking some time to plan and anticipate how much cash you might need for the month, and then going to your local branch to make a withdrawal may be all it takes to wipe out ATM fees for good.

But hold on -- what if you find yourself in need of cash while you are on vacation or otherwise away from your institution's network of ATMs?

Answer: If you need less than $35 at a time, try using your debit card at a retail store or gas station and press the "cash back" button to get access to fee-free cash. If you use a credit union, check your institution's app to find partnering or co-op credit unions with "surcharge-free" ATMs -- you'll still have to pay a partial ATM fee, but at least your institution will waive its portion of the offsite ATM fees.

2. How to Find Real-Life, Actual, No Fee Checking Accounts

Today's hyper-competitive banking market means there's no reason you should be paying a monthly fee for your checking or savings account, which can be as much as $10 to $20 or more per month. Some banks say they charge a monthly fee for the interest-bearing accounts, but unless you have $10,000-plus stashed in the account (which would yield a taxable $100 per year, or $8 per month, assuming a 1% interest yield) you are likely not doing yourself any financial favors.

If you find there's a pesky monthly fee on your account statement, ask your institution's representative if they offer a true "free checking account" and ask for the conditions to
get it (i.e. what kind of balance you need to maintain and if you need to make a certain number of transactions per month).

Always remember, if they don't offer a free checking account, you've got plenty of other banks and credit unions that would love to have your business without charging you a monthly fee for it.

3. How to Avoid Overdraft or Non-Sufficient Fund (NSF) Fees

NSF fees and overdraft charges are some of the most lucrative revenue streams that banks and credit unions collect. If your account balance goes below $0 and you continue to write checks or purchase items with your debit card, you may be charged from $20 to $35 in NSF fees for each and every payment that clears, depending on your institution.

It is easy to see how a tight balance combined with a few forgotten checks or unexpected payments coming out at the wrong time can quickly add up to hundreds of dollars in NSF fees, leading to a financial situation that you may not easily dig out of.

Solution: Don't let yourself fall into the NSF traps. If you're bad at keeping a checkbook straight, don't use your checks (which can be forgotten as fast as you write them) and only spend with your debit card. Next, ask your institution's representative to "opt-out" of overdraft protection. While "opting out" means your debit card may be denied or your checks will bounce if you don't have enough funds, you'll never pay hefty NSF fees again and it likely won't be a problem anyway if you are budgeting correctly.

One more tip: Ask if your institution allows you to link and automatically draw funds from your savings account or credit card to your checking account in the event its balance goes below zero. There may be a fee involved, but it's likely to be much less expensive than paying the dreaded NSF fees.

After considering these three important tips, start looking at your most recent bank statements and pinpointing all the fees you're being charged. Call your bank or credit union and ask why you're being charged, and how you can avoid these charges in the future. If they don't have an answer, start looking for another institution that doesn't charge those fees.

Again, there are few reasons you should be paying your bank just to hold your money. By spending less than an hour to follow these steps and start planning today, you could be on your way to never paying another dime toward bank fees again.

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