Understand the main checking account fees and how to avoid them

Managing a checking account seems simple, but unexpected fees can catch customers off guard.

By learning what fees to expect and how to avoid them, you can keep more money available in your account.

So, to discover the main checking account fees and how to avoid paying them, keep reading and learn everything!

Monthly service fee

Banks typically charge a monthly maintenance fee to cover account management services, and that’s what this fee is.

This fee usually ranges from $5 to $15, depending on the bank and varying based on a few key points.

While non-interest-bearing accounts generally have lower fees or none at all, interest-bearing checking accounts tend to have higher fees, averaging about $5.47 per month.

How to avoid monthly service fees:

• Choose free checking accounts: Nearly 47% of non-interest-bearing checking accounts have no monthly fees.
• Meet balance requirements: Many banks waive the fee if you maintain a daily or average minimum balance.
• Set up direct deposits: Accounts often waive fees for customers with regular direct deposits.

Checking account fees: Non-Sufficient Funds (NSF)

An NSF fee (Non-Sufficient Funds) occurs when a payment attempt exceeds your available balance, leading the bank to reject the transaction.
In 2024, the average NSF fee dropped to around $17.72 as banks moved to reduce these penalties.

How to avoid NSF fees:

• Monitor your account balance: Use banking apps to track your spending in real-time.
• Set up alerts: Many banks allow you to receive notifications when your balance falls below a certain threshold.
• Link to savings accounts: Opt for overdraft protection plans where funds are transferred from a savings account to cover transactions.

Overdraft fee

When a bank approves a transaction that exceeds your balance, it may cover the shortfall but charge an overdraft fee.

In 2024, the average overdraft fee increased slightly to $27.08, with some fees reaching up to $35.

These fees often apply even for small overdrafts, although some banks now offer grace periods or limits before imposing fees.

How to avoid overdraft fees:

• Opt-out of overdraft coverage: This prevents the bank from approving transactions that would result in an overdraft.
• Activate overdraft protection: Link your checking account to savings or credit accounts to avoid penalties.
• Use banking apps for budgeting: Monitor expenses to avoid negative balances.

ATM fees

ATM fees are charged when customers withdraw money from ATMs outside their bank’s network.

In 2024, these fees hit a record high, with out-of-network withdrawals averaging $4.77. You may face two charges: one from the ATM owner and another from your bank.

How to avoid ATM fees:

• Use in-network ATMs: Stick to your bank’s network to avoid fees.
• Choose banks with fee reimbursements: Some banks, like Alliant Credit Union or Ally Bank, refund ATM fees.
• Get cashback from retailers: When shopping with a debit card, opt for cashback at no extra cost.

Foreign transaction fee

Banks apply foreign transaction fees when you use your debit card abroad. These fees, ranging from 1-3% per transaction, cover currency conversion and international processing costs.

If you make purchases or withdraw cash outside the U.S., you may incur a fee in U.S. dollars for the transaction.

How to avoid foreign transaction fees:

• Use travel-friendly banks: Some institutions, like Charles Schwab Bank, reimburse these fees.
• Opt for international bank accounts: Certain banks offer accounts designed for frequent travelers with minimal or no foreign transaction fees.
• Use local currency: When using ATMs abroad, select transactions in the local currency to avoid unfavorable exchange fees.

Bank ATM fees

A bank ATM fee is charged by the customer’s own bank for withdrawing cash from ATMs, even within the bank’s network.

This fee differs from out-of-network ATM fees, as it may apply even when the customer uses a bank-operated terminal.

The fee covers maintenance and operation costs and is more common in basic or low-cost checking account packages.

How to avoid bank ATM fees:

• Make strategic withdrawals: Plan your withdrawals and make larger withdrawals at once to avoid multiple fees.
• Check free withdrawal limits: Review your bank’s policies to see if there are monthly free withdrawal limits.
• Use apps and digital payments: Minimize cash withdrawals by opting for debit card payments or digital wallets.
• Choose accounts with unlimited withdrawals: Digital banks and credit unions, such as Chime and Ally Bank, may offer free, unlimited withdrawals.
• Talk to your bank: Some banks allow fee negotiations or offer account upgrades that eliminate fees.

Understanding the variety of fees associated with checking accounts — such as service fees, NSF penalties, overdraft charges, and ATM fees — can help you navigate the financial system more effectively.

By choosing the right bank and taking advantage of features like direct deposits, overdraft protection, and no-fee networks, you can reduce or eliminate these fees entirely.

For those managing accounts on a tight budget, making small adjustments, such as opting out of overdraft programs or planning cash withdrawals strategically, can save you a significant amount over time.

Keep an eye on your account statements to ensure you’re avoiding unnecessary fees and making the most of your financial resources.

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