Few things get me more riled up than shelling out cash unnecessarily. This is especially true for bank fees! I feel this way about my bank account and those of my clients. I hate seeing that a bank has taken hundreds of dollars over the course of a few months from a client’s account when that hard-earned money could have gone towards something they valued.
Fortunately, most of these fees are avoidable. The best way to avoid unnecessary fees is to switch to a bank that doesn’t charge them. That’s right — it might be time to break up with your bank. Today, there are numerous competitive banking options, so why stay with one that is slowly draining your accounts?
If you aren’t ready to switch banks, you are not completely out of luck. Start by doing a deep dive into the terms of your account. Make sure you know what fees you could be charged and how to get them waived. If you do slip up on occasion, don’t be afraid to call your bank, explain your situation, and ask them to refund you.
Be on the lookout for these insidious fees and workarounds:
Overdraft Fees
An overdraft occurs when you don’t have enough money in your bank account to cover a transaction but the bank allows it to go through anyways. Some banks offer overdraft protection, but in many cases, “protection” is a misnomer. Rather than protecting you from an overdraft, it actually allows you to overdraft and then generally charges you a fee for the privilege! This fee can be as high as $38 per transaction. Yes, per transaction. This means that if your account balance is low, you don’t realize it — and say, grab a cup of coffee from your local coffee shop, buy groceries, get a snack in the afternoon, and fill up your gas tank on the way home — you could be facing four overdraft fees totaling $152. Those fees and the total of the items you bought will be deducted from your next deposit.
As of 2010, you have to opt into overdraft protection for debit purchases and ATM withdrawals. So that fee you were charged when you unwittingly overdrafted your account while using your debit card? Yes, you actually opted into that. Luckily, this means that you can also opt-out! Check out your account online or contact your bank to turn off overdraft protection. This will prompt your bank to decline your debit and ATM transactions if you don’t have enough money in your account. Unfortunately, overdraft “opt-in” doesn’t apply to ACH and check payments so make sure to find out your bank’s policy on those transactions.
Your bank may offer another form of overdraft protection that allows you to link a savings account or line of credit to your checking account. The bank will draw from that to cover a shortfall in your checking. Sometimes, the bank charges a fee for this service so make sure to double-check your bank’s policy before signing up.
These days, you have options to avoid overdraft fees completely by switching to a bank that doesn’t charge them:
Monthly Maintenance Fees
This is a fee (typically $5-$12) some banks charge just for having an account with them. Most banks will waive their monthly maintenance fee if your account meets certain requirements such as a minimum balance or a regular direct deposit. If this applies to you, make sure you know what requirements will allow you to avoid this fee at your bank and have a plan in place to meet them.
Unfortunately, you are most likely to end up paying these fees when you can least afford them. For example, if you are counting on your direct deposit to avoid the fee, but then lose your job, your bank kicks you when you’re already down. You may want to look into switching to a bank that doesn’t charge monthly maintenance fees such as:
ATM Fees
When you withdraw from an ATM outside of your bank’s network, your bank and the ATM may each charge you a fee of $2-$5. You can avoid this by using an in-network ATM. If you need to withdraw smaller amounts of cash, you can also opt to receive cashback at a grocery store.
If having access to fee-free withdrawals is a priority for you, you may want to consider a bank that will reimburse you for out-of-network transactions:
-
Schwab Bank High Yield Investor Checking will reimburse you monthly for all out-of-network ATM fees both domestically and abroad.
-
Axos Bank Rewards Checking offers unlimited ATM fee reimbursements in the U.S.
-
Ally Bank will reimburse you up to $10 per statement cycle for out-of-network ATM fees.
Foreign Transaction Fees
This fee applies to each transaction made on a debit or credit card in a foreign country. It typically ranges between 1%-3% of the total transaction. The best way to avoid these fees is to use a debit card and/or credit card that doesn’t charge foreign transaction fees. Schwab Bank High Yield Investor Checking is your best bet for foreign transaction fee-free ATM withdrawals and debit purchases. Many credit cards don’t charge foreign transaction fees so make sure yours is one of them!
Remember, you are not beholden to your bank! If you want to keep more money in your pocket, you can take your business elsewhere. If you’d like to explore your options, you can find many of the banks listed above on our B.F.F approved products page.
