How to Avoid the Increase in Bank Charges

Many banks market their accounts as “free,” but they don’t list all charges: for out-of-network ATMs, overdrafts, monthly service charges, even paper statements, which can add up to a lot.

And many of these Bank charges are increasing. In 2018, average ATM fees hit a record for the 14th consecutive year, 36% more than in 2008, according to Bankrate.com. And the average overdraft fee is almost the highest ever. The good news is that there are ways to avoid paying some common bank charges.

 “Consumers have to pay attention when they open a bank account,” says Anna Laitin, director of finance policy at Consumer Reports. “A free account can be very expensive when you consider the bank charges it can generate.”

bank charges

Additional bank charges become more common across the market, consumers have a harder time finding the best deal that fits their needs, whether they’re looking for hotel rooms, airline tickets, cable TV, or a bank account, Laitin says.

“This can be particularly difficult when you compare bank accounts, where different banks may have different charge structures,” says Laitin.

The good news is that there are ways to avoid paying bank charges, says Greg McBride, chief financial analyst.

Here are some common fees they may charge you and tips to avoid them.

Monthly Service Charge

When your balance falls below a certain threshold, some banks charge a fee: an average of $ 14.35 for accounts that pay interest and $ 5.57 for those that are interest-free, according to Bankrate.

The solution:  Open an account with a bank that does not have a minimum balance requirement. You are more likely to find a free checking account at a credit union or online banks like Ally Bank, Discover Bank, USAA Bank according to Bankrate. Another option: Ask if your bank forgives your fee if you directly deposit your paycheck each pay period. Many banks will.

ATM fees

Not using your own bank to withdraw cash can be expensive: Out-of-network ATM fees now average $ 4.68, according to Bankrate.

The solution: If you’re away from home, use your bank’s app to find a nearby ATM in the network, says Jason Reposa, co-founder and CEO of MyBankTracker, a website to compare banks. Or change to a bank that covers ATM charges; about a third does.

And finally, keep in mind that there are other ways to get cash from your account. For example, you can ask for money back when you make purchases with your debit card at a store. 

Overdraft Protection

Some banks will cover you if you make a payment for more than what is in your account. This can be useful if you have set up automatic payments. But if you have an overdraft, banks charge a substantial fee for that service, around $ 33 on average according to Bankrate.

The solution: Set up alerts to notify you when your balance falls below, say, $ 100. And it links the accounts so that the money can be transferred automatically from the savings account to the checking account. Or if they charge you an overdraft fee, they may remove the fee if you call the bank and ask for a refund. Unless you frequently overdraw, your bank may very well refund your money. 

Or simply choose not to participate in the service. But remember: in that case, your bank will reject a purchase or a withdrawal greater than your balance, and may still charge you if you write a bad check.

Electronic transfer fees

If you need to send or receive money from one bank to another, you may need to use a bank transfer, which can be expensive. According to NerdWallet, the average fee is $ 13 for incoming bank transfers, $ 25 for outgoing national accounts, and $ 45 for outgoing international accounts.

The solution: If you don’t need the money to settle immediately, consider transferring funds using an ACH (Automated Clearinghouse) transfer. Some banks offer it for free, and others charge a small fee. Please note that ACH transfers can take two to three days to process; a bank transfer only takes a few hours. If you need to transfer money to a family member, you can use a payment application like Apple Pay or Venmo, but there are limits on how much you can transfer at the same time.

Foreign transaction fees

Even if your bank does not charge out-of-network ATM fees in the United States, you may still be charged for using an ATM or debit card when you are abroad. Foreign transaction fees vary from 1 to 3% of the transaction, according to NerdWallet, a comparison site.

The solution: If you travel frequently, consider switching to a bank, like Capital One 360, that doesn’t charge fees for foreign transactions. You could also consider using a credit card that doesn’t charge foreign transaction fees, says Arielle O’Shea, a banking and investment specialist at NerdWallet. Among them are Barclaycard, Capital One and Discover cards.