Banking fees: The more you know, the less you’ll pay


Why do banks charge fees? Well, if you go to a theme park, you can expect to pay certain prices, right? There are tickets to get in, for starters, plus transportation costs, parking fees and the cost of meals and hotels. Then think of the potential extras: a wizard’s wand, a night safari experience or breakfast with a princess. It all can be magical, but it comes with a price.

Typically, fees are included with most experiences and bank services are no exception. Typical account fees, such as the cost of using an ATM or keeping an account from month to month, can be part of the banking experience.

For places like theme parks, the more you know, the more you can save. You might find cheap transportation at the park and not have to rent a car, for instance. The same is true for banks. Some bank service fees and charges apply to all customers. Other types of bank fees, however, might not always be charged.1

Understanding bank fees and charges

Let's go over 10 common checking account fees, what they mean and when they might occur.

1. Monthly maintenance fee

Just like you may pay for a storage unit each month, you may have to pay to keep your money in a bank. A bank maintenance fee is what you’re charged to keep your account safe and ready to use.2

How to avoid it: Some banks don’t charge this type of fee at all. But at banks that do charge a maintenance fee, there may still be ways to avoid the charge. For example, if you’re a student or under the age of 25, you might not have to pay a maintenance fee. Many banks don’t charge for younger account holders or those still in school. Also, if you maintain a certain balance in the account, you may not be charged a maintenance fee either. Some banks might not charge if you always have at least $1,500 in the account, for instance. Ask your bank since this can vary from place to place.

 

2. Minimum balance fee

This is a charge that applies if your account dips below a certain balance.2 If the bank sets a minimum balance, you may be asked to have at least that amount or more in your account at all times. If you have less in the account, you could be charged this type of fee. Say your bank has a minimum balance set at $500. If you usually have less than $500 in your checking account, you might have to pay a fee to the bank.

How to avoid it: Check the minimum balance your bank asks you to keep in an account. If you can, maintain the minimum amount or more in the account. This will prevent you from paying bank fees. Another option is to look for a bank that doesn’t charge a minimum balance fee.

 

3. ATM withdrawal fee

Many banks charge a fee if you take out cash from an ATM that isn’t in their network.3 If you’re traveling or need to run to a different ATM in a pinch, you might face this type of bank fee.

How to avoid it: One way to steer clear of this charge is to make your withdrawals at an ATM that is in your bank’s network. Another option is to look for a bank that doesn’t charge ATM fees.3

 

4. Overdraft fee

If you spend more money than you have in your account, it’s called an overdraft. Say you have $50 in your account. If you spend $100 to see a show, an overdraft occurs. Some banks will cover the amount for you. This setup is often called overdraft protection, and the service may include a charge.4

How to avoid it: Keep careful track of your account balance. One way to do this is to sign up for alerts. You can ask to have a text message sent to you from your bank when your balance reaches a certain level, such as $50.

Another way to avoid this fee is to opt out of overdraft protection. This means if you use your debit card and you don’t have enough funds in your checking account to pay for the purchase, the bank won’t cover the purchase for you. Say you’re at an amusement park and want to get a souvenir that costs $50. If you only have $25 in your account, you won’t be able to make the purchase. When you swipe your card, it will be declined.

 

5. Lost card fee

If your card is lost, you may have to pay a fee to replace it.

How to avoid it: Having your cards in the same place in your wallet can make it easy to keep track of them. If you do lose your card, call the bank or go online to turn the card off, and then request a new one.

 

6. International transaction fee

Traveling outside the U.S. will likely come with amazing adventures. Keep in mind, it may also come with extra banking fees. If you swipe a card, you could be charged a fee for the international purchase. This is because there are more steps involved with transactions that cross borders, and these steps can cause an increase in the overall cost.

How to avoid it: Some credit and debit cards don’t charge a fee for international transactions. If you shop around for different options before taking an international trip, you could look for one without fees for international purchases.

 

7. Paper statement fee

It costs money to print paper statements and then send them out in the mail. For this reason, sometimes a charge is included when you request to receive paper statements.

How to avoid it: In this case, prevention can be easy. If you’re comfortable with it, ask to have all messages and statements sent to you electronically.

 

8. Inactivity fee

If you don’t have any deposits or withdrawals made from an account over a long time, you could pay this banking fee. Also called a dormancy fee, an inactivity fee might be charged after a set period, typically several months with no transactions.5

How to avoid it: For accounts you don’t plan to access much, it’s possible to set up an automatic transfer. You might have a bill paid from the account each month. Or maybe you transfer a certain amount into the account every so often. If you aren’t using the account, you can close it to avoid the fee.

 

9. Account closing fee

If you open an account but decide to close it later, you might have to pay a fee to do so. That’s because some banks charge a fee for accounts that close during a certain timeframe.6

How to avoid it: Before closing an account, ask your bank about any fees. If you find out you need to keep the account open another month to steer clear of the fee, it might be worthwhile to maintain the account until then.

 

10. Teller fee

If you need a person to help you with your transactions, you might have to pay an extra price. Some banks, but not all, charge a fee to have a teller help you.7

How to avoid it: Check with your bank, as they frequently do not charge a teller fee at all. Some banks that charge a teller fee only do so for certain transactions, such as a cashier’s check or a wire transfer. Also, lots of banks offer online banking. For many transfers, payments and balance checks, you might be able to hop online and log in to your account on your own.

Now that you have a roadmap of common checking account fees, you can take a little time to see what types of bank charges your bank currently has. And if you’re shopping for a new bank, ask about these fees before opening an account. By understanding the different types of bank charges, you might be able to reduce what you spend on account charges and have more cash for that trip to the theme park.


This site is for educational purposes. The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional.

  1. Bank Fees. (November 30, 2020) Retrieved December 15, 2021, from https://www.investopedia.com/terms/b/bank-fees.asp 
  2. Checking Account - Checking Account Fees (undated). Retrieved December 15, 2021, from https://www.fdic.gov/consumers/consumer/moneysmart/podcast/documents/checking-accounts-checking-account-fees.pdf.  
  3. How do I avoid ATM fees (August 27, 2020). Retrieved December 15, 2021, from https://www.consumerfinance.gov/ask-cfpb/how-do-i-avoid-atm-fees-en-981/.
  4. Bank overdraft protection: Do you need it? (October 11, 2021). Retrieved December 15, 2021, from https://www.bankrate.com/banking/checking/bank-overdraft-protection-do-you-need-it/
  5. Dormancy fees (undated). Retrieved December 15, 2021, from https://www.bankrate.com/glossary/d/dormancy-fees/
  6. Can I close my account whenever I want? (August 28, 2020). Retrieved December 15, 2021, from https://www.consumerfinance.gov/ask-cfpb/can-i-close-my-account-whenever-i-want-en-957/.
  7. The bank is charging me a fee to make change at the teller line, even though I have an account with them. Can it do that? (April 2021). Retrieved December 15, 2021, from https://www.helpwithmybank.gov/help-topics/branch-services/currency-bills-coins/teller-fee-charge.html.

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