How Much Does It Cost to Open a Bank Account?


A bank account is a cornerstone of personal finance management. Whether you’re depositing your paycheck, saving for a rainy day, or managing expenses, understanding the costs associated with opening and maintaining a bank account is essential.

couple working on finances

This article will guide you through the types of bank accounts, typical fees, strategies for minimizing costs, and factors to consider when choosing a bank to help you make informed decisions.

Types of Bank Accounts and Their Costs

Checking Account

Definition and Purpose

A checking account is a type of bank account that allows you to deposit money, make withdrawals, pay bills, and access funds via a debit card or checks. It is designed for frequent transactions and everyday spending.

Typical Fees

Monthly Maintenance Fee

Checking accounts often come with a monthly maintenance fee, which is a fee charged by the bank for maintaining your account. The fee can range from $5 to $15 per month, depending on the bank or credit union and the specific account. Some banks offer tiered accounts, where higher-tier accounts have more features but also higher fees.

Your checking account may also require a minimum opening deposit to activate it once you’ve been approved.

Overdraft Fees

Overdraft fees are charged when you spend more money than you have in your checking account. These fees can be quite expensive, ranging from $25 to $35 per overdraft. Some banks offer overdraft protection, which links your checking account to another account, such as a savings account or credit card, to cover overdrafts and avoid fees. However, this service may come with its own fees.

ATM Fees

When using an ATM outside your bank’s network, you may be charged a fee by both the ATM owner and your financial institution. These fees can range from $2 to $5 per transaction. Some banks and credit unions participate in shared ATM networks, which provide access to thousands of ATMs without additional fees.

Minimum Balance Requirements

Some checking accounts require you to maintain a minimum balance to remain fee-free. If your balance falls below the minimum, you may be charged a fee, typically ranging from $5 to $15.

How to Avoid or Minimize Fees

  • Choose a bank that offers a free checking account with no minimum balance requirement or one that waives the monthly fee with direct deposit.
  • Maintain enough money in your account to avoid overdraft fees and meet the required account balance.
  • Use in-network ATMs or seek banks that reimburse out-of-network ATM fees.
  • Opt for overdraft protection, but be aware of any associated fees.

Savings Account

Definition and Purpose

A savings account is a type of bank account designed for long-term savings and earning interest on your deposits. It is not intended for frequent transactions, and in fact, federal regulations limit the number of withdrawals or transfers to six per month.

Typical Fees

Monthly Maintenance Fees

Similar to checking accounts, savings accounts may also have monthly fees. However, these fees are often lower, ranging from $2 to $10 per month. The fee may be waived if you maintain a minimum balance or set up automatic transfers from a linked checking account.

Excess Withdrawal Fee

Exceeding the limit of six withdrawals or transfers per month may result in an excess withdrawal fee, usually around $5 to $15 per transaction. Repeatedly exceeding this limit could lead to account closure or conversion to a checking account.

Minimum Balance Requirements

Some savings accounts require a minimum balance to avoid fees or earn interest. Falling below the minimum may result in a fee or reduced interest rates. These requirements can vary, with some accounts requiring as little as $25, while others may require $100 or more.

How to Avoid or Minimize Fees

  • Choose a bank or credit union that offers free savings accounts and has no minimum deposit requirements.
  • Monitor your withdrawal frequency to avoid excess withdrawal fees. Use a checking account for more frequent transactions.
  • Maintain the required account balance to avoid charges and earn interest.

Money Market Account

Definition and Purpose

A money market account is a hybrid between a checking and savings account, offering higher annual percentage yields (APYs) than traditional checking or savings accounts while still providing limited check-writing and debit card capabilities. These accounts are an excellent option for those who want to earn more interest on their deposits but still need occasional access to their funds.

Typical Fees

Monthly Maintenance Fee

Money market accounts may have monthly maintenance fees ranging from $5 to $15, similar to checking accounts. The fee may be waived if you meet balance requirements or set up automatic transfers from a linked checking account.

Minimum Balance and Deposit Requirements

These accounts often have higher minimum balance and deposit requirements than a checking or savings account, sometimes as high as $1,000 or more. Falling below this balance may result in a fee or a reduced interest rate.

How to Avoid or Minimize Fees

  • Shop around for a financial institution that offers low-fee or no-fee money market accounts.
  • Maintain the required minimum balance to avoid fees and earn interest.
  • Set up automatic transfers to help you maintain the required account balance.

Certificate of Deposit (CD)

Definition and Purpose

A certificate of deposit is a type of time deposit account where you agree to deposit a fixed amount of money for a set period, earning interest at a higher rate than a traditional savings account. CDs typically have terms ranging from a few months to several years, with longer terms generally offering higher yields.

Typical Fees

Early Withdrawal Penalty

Withdrawing funds from a CD before its maturity date will often result in an early withdrawal penalty. This penalty may be calculated as a percentage of the amount withdrawn or as a certain number of months’ worth of interest. The penalty can be quite substantial, sometimes erasing all the interest earned on the CD.

How to Avoid or Minimize Fees

  • Choose a CD term that aligns with your financial goals and needs to avoid the need for early withdrawals. Consider using a CD ladder strategy, which involves investing in multiple CDs with varying terms to provide more frequent access to funds.
  • Compare CD rates and terms across different financial institutions to find the best fit.

Factors That Affect Bank Account Costs

Bank Size and Type

Traditional Banks

Traditional banks, such as national and regional banks, may have higher fees due to their extensive branch networks and operational costs. However, they often provide a wide range of services and products, including personal loans, mortgages, and credit cards.

Credit Unions

Local credit unions are member-owned, not-for-profit financial institutions that typically offer lower fees and higher yields on deposits. They may also offer more personalized customer service and a sense of community. However, they may have fewer branches and limited product offerings compared to traditional banks.

Online Banks

Online banks, which operate without physical branches, generally have lower overhead costs, allowing them to offer lower fees and higher rates. They often provide a user-friendly mobile banking experience but may have limited customer service options, such as no in-person assistance.

See also: Are Online Banks Safe?

Customer’s Financial Habits

Your financial habits can significantly impact the cost of maintaining a bank account. Maintaining minimum balances, using in-network ATMs, and setting up direct deposit can help you avoid or minimize fees. Additionally, monitoring your spending and keeping track of your account activity can help you identify and address potential issues before they result in fees or penalties.

Bank Promotions and Offers

Some financial institutions may waive fees or offer sign-up bonuses to attract new account holders. These bonuses can range from cash rewards to promotional interest rates or waived fees for a certain period. Taking advantage of these promotions can help reduce the cost of opening and maintaining a bank account, but it’s essential to read the fine print and understand any requirements or limitations associated with the promotion.

Tips for Choosing the Right Bank and Account for Your Needs

Researching Bank Account Options

Read customer reviews and get recommendations from friends or family to compare bank account features, fees, and rates across different financial institutions. Look for banks that have a history of low fees, competitive rates, and positive customer experiences.

Evaluating Bank Account Features

When choosing a new bank account, consider factors such as interest rates, accessibility, customer service, and digital services to ensure it meets your needs and preferences. Evaluate the convenience of branch and ATM locations, the quality of mobile and online banking platforms, and the availability of customer support when making your decision.

Considering Additional Products and Services

Some banks offer additional products and services that may be of interest to you, such as credit cards, mortgages, investment accounts, and business bank accounts. If you think you may need these services in the future, consider opening a bank account with a financial institution that offers competitive rates and terms on these products.

Bottom Line

Opening a bank account is an essential step in managing your personal finances. By understanding the various types of bank accounts, their associated fees, and strategies for minimizing costs, you can make informed decisions and take control of your financial future. Researching your options, evaluating account features, and considering your financial habits will help you find the right bank and account to meet your needs and maximize your savings potential.

Meet the author

Crediful is your go-to destination for all things related to personal finance. We're dedicated to helping you achieve financial freedom and make informed financial decisions. Our team of financial experts and enthusiasts brings you articles and resources on topics like budgeting, credit, saving, investing, and more.