The ins and outs of Bank Fees

Hidden Fees. You hate them. We hate them. Often they are buried in the fine print and in the fee disclosures in hard-to-find places. You need a bank account, so we want to help you understand what these fees are and what they mean so you can find the best bank for you. Here at Let’s Get Set, our mission is to help you save as much as possible and finding banks that charge as few fees as possible is one way we can help you do that.

So, what are the fees I should try to avoid?

When it comes to fees linked to checking and savings accounts, you should try to avoid them where you can. The major ones we look to avoid are monthly service or maintenance charges, ATM fees, and overdraft and insufficient funds fees. However, the list doesn’t stop there: among many others, there are inactivity fees, transfer fees, wire fees, statement fees, debit card issuance fees, early closure fees, check cashing fees, and our personal favorite (yes we are being sarcastic), overdraft protection fees — you pay the bank a fee not to charge you more fees! What!?

Great, but what ARE those fees? I want to understand them.

We just threw a lot out there, so we’ll explain the major ones more closely.

• Monthly maintenance or service fee: These are recurring fees, typically $5-$12 per month, that you are charged just to have your account open. Often, banks will give you the ability to have these waived if you meet certain criteria, such as having a minimum monthly balance, automatically depositing a certain amount into your account each month and enrolling in electronic statements.
• ATM fees: These are the fees the bank itself charges you to withdraw money from the ATM. Often, these are on top of the fees that the ATM provider charges as well. Typically, this takes the form of $2.50 bank ATM fee + $3.00 ATM provider fee, for a total of $5.50 just to take out cash. Thankfully, many banks waive their $2.50 fee if you use one of their own ATMs, though they still charge you a fee if you use someone else’s.
• Overdraft fees: Everyone has been dinged by one of these before. You forgot to check your balance and decided to buy something with your debit card, only to see a $35 fee pop up in your account the next day alongside a negative balance. That $15 t-shirt sure got expensive quickly! Overdraft fees are charged when you have given the bank permission to cover any insufficient balances in your account when you go to make a purchase.
• Overdraft protection fees: Banks give you the option to protect from having insufficient funds when you make a purchase. If your checking account doesn’t have a sufficient balance, money is pulled from your savings account, credit card, or other line of credit to avoid overdrawing. For this service, some banks charge you a fee as well, typically around $10-$15.
• Insufficient funds fee: Very similar to overdraft fees, these happen when you try to pay out of your checking account with insufficient balance to cover the charge. In this case, the retailer (or whoever you are paying) will reject your payment, e.g. bounce your check, and your own bank will charge you an insufficient funds fee of typically $28-$35. The person you are paying may even be charged a fee if this happens too!
• Inactivity fees: These fees are charged if you use your account too little over the course of 6–12 months. These fees are typically in the $5-$10 per month range.
• Transfer fees: These are fees that your bank charges to transfer money out of your account to others, or to receive incoming transfers from other accounts. Thankfully, these don’t typically apply to transfers between your own accounts, but they still might.

Ok, so I get the fees. What other rules or restrictions might apply to checking or savings accounts?

Checking accounts are typically more flexible and allow you to access your funds any time and at no cost (besides ATM fees). However, some checking accounts also pay interest on the money you have deposited. To earn this interest, you might need to make a certain number of purchases on your debit card, maintain a certain minimum (or maximum) balance, or receive a certain number or amount of direct deposits into your account each month. Your checking account is the account linked to a debit card, that you use to pay your bills, and that you probably get your paycheck direct deposited into.

Savings accounts are meant for you to deposit funds and let them stay there over certain periods of time, so typically are more restrictive. They pay higher interest on your deposits but may have a minimum deposit or balance criteria. s Beyond that, savings accounts also have withdrawal limits. Specifically, the government mandates that you are only allowed to withdraw or transfer from a savings account 6 times each month, otherwise the bank may block further withdrawals, close the account, or charge you fees — or maybe even all three. Again, if this is where you are keeping your funds for an emergency fund or to save for your child’s future, you shouldn’t be withdrawing from it 6 times a month!

Is it even possible to avoid all of these fees?

Amazingly, yes! You just need to know where to look. That’s why we’ve done the research ourselves to find some options for you that do just that. Many banks have started up specifically with the goal in mind of reducing the amount of fees you have to pay. Are they 100% free? Not quite, but pretty close! Several online banks and some credit unions have been able to cut the fees that you might be charged down to just a few, with options to avoid those in most cases as well. You will typically run into most, if not all, of those fees mentioned earlier at traditional banks and some credit unions, but there are exceptions.