What are Bank Fees?
Bank fees are the charges that your bank or other financial institution charge customers to provide banking services.
Some of the fees are one-time fees, while some are ongoing ones.
These charges can sometimes take you by surprise – some are completely avoidable, while some can’t be avoided, but can be minimized.
In this article, we’ll walk you through some of the most common ones and how you can avoid them.
Common Bank Fees and How to Minimize Them
1. Monthly Account/Maintenance Fees
Most financial institutions account charge monthly and maintenance fees on their chequing and savings accounts.
The fee will depend on which account you have, but generally start at a few dollars per month and go up from there for your account and the services included.
How to Minimize: The best way to minimize monthly account and maintenance fees is by browsing the account options offered by your bank and choosing the one that best suits you.
If you don’t need all the fancy features like free cheques and free transfer fees, opt for a more basic plan and get the lowest monthly fee possible (or none).
Some accounts will waive the fee if you keep a certain bank balance throughout the entire month.
2. Overdraft Fees
Overdraft fees are often the most unpleasant surprise fees that you could encounter.
If your account gets overdrawn or a payment comes out and your account goes below zero, your bank may charge you overdraft fees.
These fees are usually around $40.
How to Minimize: No one wants to find out that not only was their bank account overdrawn, but that they were also hit with that hefty overdraft fee.
Other than monitoring your accounts and making sure that you always have enough money in there in time for your withdrawals, you could also sign up for overdraft protection.
Some financial institutions will offer a couple of options for overdraft protection: a monthly one and a pay-as-you-go one which only charges you when you use it.
With overdraft protection, you’re charged a much lower fee if your account gets accidentally overdrawn (usually about $4 or $5) instead of the usual overdraft fee and it also allows for the payment to go through uninterrupted.
(Be sure to understand interest charges for the duration of your account being overdrawn)
3. ATM Fees
For many bank plans, you get charged an ATM fee when you use a machine not belonging to your bank.
This fee is usually around $2 to $3.
On top of that, the ATM will also charge you around a few of a few dollars.
How to Minimize: The best way to avoid ATM fees is to plan ahead and visit an ATM provided by your bank.
In addition, keeping a little cash on you at all times can help avoid any ‘cash-only’ situations.
Alternatively, you can also use your debit card at a store to buy something and ask to get cashback.
Most stores don’t charge for this service, some do around $1 or $2.
Did You Know?
Many banks and other financial institutions offer some sort of student chequing plan. If you’re a student, these plans are usually free of charge and come with some good perks, so check with your bank to see if you’re eligible.
4. Paper Statement Fee
If you’re still getting paper statement fees in the mail, you’re most likely being charged for the service.
Most banks charge around $2 to $3 a month for paper statements, to pass the costs over to the customers and encourage using e-statements.
How to Minimize: If you have access to your banking online or through the app, you can access all of your statements digitally and therefore turn off paper statements.
5. Transaction Fees
If you don’t check your account often, you may not even realize that you’ve been charged transaction fees.
Most accounts have a limit on the number of transactions you can complete each month.
Once you surpass these limits or if your account has pay-per-use fees, transaction fees can apply to any money coming out of the account, like cash withdrawals, bill payments, transfers and any other payments, but could potentially apply to money going in as well.
If you go over the transaction limit, you’ll usually be charged an additional $1 to $1.50 per transaction.
How to Minimize: To avoid transaction fees, you need to be aware of your transaction limits.
A good way to avoid passing your transaction limits is by using your credit card for most of your purchase transactions, and paying it off regularly.
Otherwise, opt for a premium account that offers unlimited transactions.
Frequently Asked Questions
- Do all banks charge fees?
Most banks charge some sort of fee. Banks need to cover their costs by charging their clients certain fees to do their banking with them. However, smaller financial institutions and credit unions look to compete on fees and may offer lower fees.
- Why do banks charge a monthly fee?
Banks charge a monthly fee to cover the costs associated with providing customers with chequing and savings accounts.