Bank Fees: Everything You Need to Know to Avoid Them

If you’ve got a checking account or savings account, chances are you’ve gotten hit with a fee at some point. For banks, fees equal increased revenue but for consumers they’re simply a nuisance. Before you hand over another penny to your bank, here’s what you need to know to avoid racking up unnecessary fees.

A financial advisor can help you create a plan for reaching your financial goals.

Account Closing Fees

When you open a new checking or savings account you’re usually required to make a minimum deposit upfront. Depending on the bank and the type of account you’re opening this can be as little as $1. Aside from that, you don’t have to worry about any fees or additional charges to get things going.

If, however, you decide to close your new account, be prepared to cough up some cash. Most banks charge customers a fee if you don’t keep your account open for a certain period of time. If you’re thinking of moving your money elsewhere, check with your bank first to make sure you won’t get hit with a penalty.

Paper Statement Fees

Choosing to receive electronic statements versus old-fashioned paper ones benefits the environment but it can also help you keep some extra green in your wallet. In an effort to encourage customers to take advantage of online banking services, many banks are now charging a fee for requesting paper statements.

It may not seem like much to pay $2 or $3 a month for this service but it can add up over time. Not only that but you’ll have to worry about keeping up with all your paperwork. Choosing electronic statements instead cuts down on clutter and cost.

Teller Fees

If you have a question about your bank account or you need help with certain transactions you may need to stop by your local branch. Getting help from a teller is the logical choice but it could actually end up costing you money, depending on your bank or credit union.

For example, if you have an account designed only for digital banking, you may incur fees when you make deposits or withdrawals through the teller versus completing these transactions online. If you prefer to do your banking in person, steer clear of accounts that charge teller fees.

Account Maintenance Fees

An account maintenance fee is essentially money the bank charges you to keep your account open. Some banks don’t charge any maintenance fees at all while others only tack them on to certain types of accounts.

Maintenance fees can be assessed on a monthly or yearly basis. The fees typically range from $4 to $20, although there are a handful of banks that charge more especially for higher-tier services like Chase’s Premier Plus Checking. You may be able to avoid a maintenance fee by meeting certain requirements, such as maintaining a minimum monthly balance, enrolling in direct deposit, or automatic bill pay.

Minimum Balance Fees

In addition to a monthly or yearly maintenance fee, you may also be subject to a minimum balance fee if you don’t keep enough cash in your account. Many banks assess these fees to help cover some of the cost of providing account services.

Depending on where you bank, minimum balance fees can be assessed based on your average daily balance or your balance on the last day of your statement cycle. If your balance fluctuates between highs and lows throughout the month, you’re probably better off looking for an account without a minimum balance requirement.

Inactivity Fees

There are certain types of bank accounts that limit the number of transactions you can have in a given month. If you go over what’s allowed, the bank may charge you a fee. You can also get stuck paying a fee if you don’t have enough transactions posted to your account.

Inactivity fees typically only kick in after your account’s been dormant for a prolonged period of time, usually three to six months. If you’re planning to take a hands-off approach to your account, setting up automatic transfers or bill payment can help you avoid an extra charge.

Online Banks vs. Traditional Banks: Who Charges More Fees?

When it comes to banking fees, comparing online banks vs traditional banks can make a big difference. Traditional brick-and-mortar banks often come with a longer list of fees compared to their online counterparts. That’s because physical banks have higher overhead costs, such as staffing branches and maintaining buildings. To help offset these expenses, many traditional banks pass those costs along to customers in the form of monthly maintenance fees, teller service fees, and ATM surcharges.

Online banks, on the other hand, typically operate with lower overhead. This allows them to offer more competitive fee structures. Many online banks eliminate monthly maintenance fees altogether, and some even reimburse out-of-network ATM fees, a feature that can be especially appealing if you travel frequently or live in a rural area. Beyond fees, online banks tend to offer better rates on high-yield savings accounts and CDs.

Another fee advantage with online banks is transparency. Because most of your interaction is digital, online banks often make it easy to view a detailed breakdown of fees, account requirements, and benefits right on their websites or apps. However, one potential trade-off is the lack of in-person customer service. If you’re someone who prefers face-to-face assistance, a traditional bank may still be a better fit.

How to Compare Bank Accounts Before You Open One

Before opening a new checking or savings account, it’s worth doing a little homework to avoid unpleasant surprises down the road. Fees can vary widely from one institution to another, so understanding what to look for upfront is key to protecting your money.

Start by reviewing the bank’s fee schedule. Most banks list this information online, and it will outline potential charges for account maintenance, paper statements, ATM use, overdraft fees, and more. Pay special attention to any conditions that waive those fees, such as maintaining a minimum balance or setting up direct deposit.

Next, check for minimum deposit and minimum balance requirements. Some accounts require you to keep a certain amount of money in the account at all times to avoid monthly fees. If your balance tends to fluctuate, look for accounts with no minimums.

You’ll also want to explore any promotional offers. Many banks offer sign-up bonuses or limited-time fee waivers to attract new customers, but make sure you understand the terms. Some bonuses come with strings attached, like maintaining a certain balance for several months.

Finally, compare account features. Does the bank offer mobile check deposit, budgeting tools, or access to a large ATM network? Convenience matters just as much as cost, especially if you rely on digital banking.

Bottom Line

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A bank account is meant to be a convenient way to keep your cash safe but it can end up being a hassle if you’re constantly throwing money away on fees. If you’re planning on opening a new account or you’re not sure what fees your current bank charges, talking with a financial advisor can help you choose the right account for your needs and budget.

Banking Tips

Where you bank and what accounts you open should be part of your larger financial strategy. If you don’t have a plan for your finances then you may want to work with a professional like a financial advisor who can help. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Credit card rewards can help you save but you have to spend to save. So be sure that when racking up the points, you are also using your credit responsibly.
Avoid unnecessary banking fees. Maybe you’re paying a monthly service fee when a free checking account with the exact same perks is available. Or perhaps you didn’t realize your bank is charging you for paper statements. It can help to double-check your statements to consolidate your spending and save some cash.