The two most common types of checking account fees – overdraft and monthly maintenance fees – are by no means the only ways banks can charge you for your activities. It’s all too easy to run afoul of a bank’s rules and find yourself paying fees that can exceed $100. You can take steps to prevent checking account fees and even earn some interest on your account balance.
Monthly Maintenance Fees
A 2019 survey from Bankrate finds the average monthly maintenance fee for checking accounts that don’t pay interest is $5.61. For interest-bearing checking accounts, this fee skyrockets to an average of $15.05 per month.
Your best defense against this high fee is to open a free checking account. However, to get truly free checking, you may have to jump through hoops like limiting the number of checks you write each month, maintaining a minimum balance or signing up for direct deposit. Credit unions and community banks are more likely to offer free checking accounts. Also, keep in mind that “free” checking accounts can and do charge all sorts of other fees.
Check Overdraft Fees
Your bank can charge you a hefty fee, averaging $33.36 per instance in 2019 according to Bankrate, when you write a check for more than your account balance. If the bank pays the check anyway, it charges you an overdraft fee. However, it may return the check unpaid and charge you a non-sufficient fund fee (NSF).
You can avoid or reduce these fees by linking a savings account or credit card to your checking account. The linked account covers the overdrawn amount but can charge you a transfer fee each time. To avoid overdraft fees, you can opt out of overdraft protection when you open the account, but your overdrawn checks will bounce and incur an NSF.
Banks may charge for each instance of an overdraft. For example, if you write three checks that all bounce at the same time, your penalty fees can easily exceed $100. Many banks will send out alerts when your checking account balance falls to a dangerously low level. Also, your bank might offer an app that lets you check your balance at any time. Using these tools can help you avoid writing rubber checks and incurring high fees.
Other Bank Fees
Banks charge all sorts of fees to support their profit margins, including:
- Paper Statement Fees: It will cost you $2 to $3 per statement if your bank prints and mails it to you. You can avoid this fee by receiving your statements electronically. If required, you can create a paper copy of the electronic statement via your printer.
- Debit Card Fees: A debit card lets you draw funds from your checking account without carrying around a checkbook. While the card may be a free perk accompanying your checking account, you might be charged for ATM withdrawals, purchases using PINs and replacing a lost card. Card replacement fees of $5+ are not unusual, and rush delivery might cost you $25 or more. The overdraft fees for your checking account also apply to your debit card.
- Account Closure Fees: Some banks will charge you around $25 if you close your account within three to six months after opening it. This type of fee discourages customers from opening accounts just to receive a new-customer bonus and then close the account shortly after. You can avoid this fee by keeping the account open for the required time period.
- Wire Transfer Fees: You might face a fee of $25 to $30 when you accept a wire transfer into your checking account. This fee doesn’t apply to regular electronic fund transfers or direct deposits. Some banks charge a fee for outgoing wire transfers, typically around $15.
The Unbanked Alternative
A Federal Deposit Insurance Corporation survey released in 2018 found that more than 14 million Americans are unbanked (i.e., don’t have any open checking or savings accounts at a bank or credit union). While this certainly will cut down on your bank fees, you can expect to cough up fees for money orders, prepaid debit cards and other financial tools you may need to compensate for the lack of a checking account.
Nonbank and online-only bank alternatives are available that provide checking-account-like features for the unbanked and underbanked. These alternatives include offerings from Walmart, American Express® Bluebird®, Chime®, Simple, Betterment and others. If bank fees make your skin crawl, checking account alternatives can provide you with ways to reduce or eliminate those pesky charges.
- Bankrate: Smart Banking: ‘Free’ Checking Not Always Free
- 1st Source Bank: Avoiding Non-Sufficient Fund and Overdraft Fees
- FDIC: 2017 FDIC National Survey of Unbanked and Underbanked Households
- Bankrate: Rising ATM and Overdraft Fees Leave Consumers Paying Much More Than They Did 20 Years Ago
- Chime: The Real Life Impact of Overdraft Fees
- My Banktracker: What Are Paper Statement Fees?
- CNN Money: 9 Most Annoying Bank Fees
- U.S. N ews & World Report: 7 Pesky Bank Fees and How to Avoid Them
- Business Insider: Wire Transfer Fees Tend To Be Expensive, but You May Be Able To Lessen the Cost Depending on Your Bank
- Federal Deposit Insurance Corporation. "Weekly National Rates and Rate Caps - Weekly Update." Accessed May 6, 2020.
- Bankrate. "Checking fees rise to record highs in 2012." Accessed May 8, 2020.
- Bankrate. "Best Checking Accounts of May 2020." Accessed May 8, 2020.
- Federal Reserve Bank of New York. "How Effective Is Lifeline Banking in Assisting the ‘Unbanked’?," Pages 1-2. Accessed May 8, 2020.
- Bankrate. "Survey: Rising ATM and overdraft fees leave consumers paying much more than they did 20 years ago." Accessed May 8, 2020.
- Federal Deposit Insurance Corporation. "Deposit Insurance FAQs." Accessed May 8, 2020.
- National Credit Union Administration. "Bank to Credit Union Conversions." Accessed May 8, 2020.
- National Credit Union Administration. "Share Insurance Fund Overview." Accessed May 8, 2020.
Eric Bank is a senior business, finance and real estate writer, freelancing since 2002. He has written thousands of articles about business, finance, insurance, real estate, investing, annuities, taxes, credit repair, accounting and student loans. Eric writes articles, blogs and SEO-friendly website content for dozens of clients worldwide, including get.com, badcredit.org and valuepenguin.com. Eric holds two Master's Degrees -- in Business Administration and in Finance. His website is ericbank.com.