Bank Smarter: How to Avoid Unnecessary Bank Fees


You may be working hard to save money, pay down high interest debt, and potentially prepare for an economic downturn. But, even as you may have negotiated car insurance rates, switched mobile phone providers, and even eliminated subscription services to save money, unnecessary expenses can sneak into your budget.

man reading papers

The average American pays more than $150 per year in banking fees, or as much as $14 per month, according to recent data. It may not sound like a lot, but it could cover your Netflix or Spotify or Amazon Prime subscription for a month.

The painful thing about bank fees is you can get the same services for free if you shop around and change banks. You can’t say that about Netflix, Spotify or Prime. And I don’t know anyone who texts their best friend to talk about their latest bank transaction.

With this in mind, it makes sense to reduce bank fees wherever and whenever you can. This guide aims to provide you with the knowledge and strategies needed to manage your bank accounts effectively.

By understanding the different fees and their implications, you can make smarter banking decisions, ensuring your hard-earned money remains in your pocket. Let’s dive into how you can protect your finances from these common, yet avoidable, banking pitfalls.

Types of Bank Fees

Bank fees might seem like small, inevitable costs. After all, each fee serves a purpose from the bank’s perspective. But for customers, they’re just an unnecessary drain at a time when every dollar counts. Here’s a breakdown of the most common bank fees you might encounter.

Monthly Maintenance Fees

Many banks charge a monthly fee to maintain your account. These fees are often justified by banks as a cost for account servicing and access to features like customer support and online banking. However, not all banks require these fees, and there are ways to avoid them, which we’ll explore later.

Overdraft Fees

When you spend more than your account balance, you might get hit with overdraft fees. These fees can be hefty, sometimes reaching up to $35 per transaction. They occur when a check, automatic payment, or debit card purchase exceeds the available balance in your account, resulting in a negative balance.

Returned Item or Non-Sufficient Funds (NSF) Fees

Sometimes a bank will decline your transaction rather than processing it as an overdraft. This sometimes happens with checks or automatic bill payments deducted from your checking account. In this case, your bank account may not go into the negative, but your transaction will be declined and you will still pay a fee.

ATM Fees

Using an ATM that’s not affiliated with your bank can lead to charges. You may incur these fees when you use an ATM outside your bank’s network. What’s worse is that fees may include charges from both the ATM operator and your bank for using an out-of-network ATM. The ATM operator will notify you of the fee and add it to your withdrawal amount, but you’ll have to check your bank statement to see if your bank added charges of its own.

Foreign Transaction Fees

These fees are charged for transactions made in a foreign currency or that pass through foreign banks. They’re typically a percentage of the transaction amount. If you travel abroad or make purchases from international vendors, you might encounter these fees.

Paper Statement Fees

In an effort to encourage digital banking, some banks charge fees for providing paper statements. While this might seem minor, it’s an easily avoidable fee for those who are comfortable with online banking and electronic statements.

Account Closure Fees

Some banks charge a fee if you close your account within a certain timeframe after opening it. This is often seen in accounts that offer sign-up bonuses or other incentives. It’s important to understand the terms and conditions related to account closure to avoid these fees.

Strategies for Avoiding Monthly Maintenance Fees

Monthly maintenance fees can be a nuisance, but with the right strategies, you can typically avoid them. Here’s how to keep these fees at bay.

Choose the Right Type of Bank Account

Different bank accounts come with different fee structures. For example, basic checking accounts often have lower fees compared to premium accounts with more features. Online banks, which typically have lower overhead costs, may offer accounts with no monthly fees at all. Research and compare to find an account that suits your needs without the extra cost.

Meet Minimum Balance Requirements

Many banks waive the monthly fee if you maintain a certain minimum balance. This amount varies from bank to bank and may require you to keep a significant amount in your account. If you’re able to meet these requirements, it’s a simple way to avoid the fee.

Pay attention to how the bank calculates your minimum balance. It might be your balance on the date you receive your statement or the average daily opening balance.

Sign Up for Direct Deposit

Some banks offer to waive the monthly fee if your account receives regular direct deposits, such as your paycheck or government benefits. This can be an easy fix if your employer offers direct deposit options.

Explore Fee Waivers for Students, Seniors, or Military Personnel

Banks often have special fee waivers or account types for students, seniors, or military personnel. If you fall into one of these categories, ask your bank about accounts tailored to your status.

Overdraft Protection: A Double-Edged Sword

Overdraft protection can be a helpful tool, but it’s important to understand how it works and its potential downsides.

How Overdraft Protection Works

Overdraft protection prevents your transactions from being declined when you don’t have enough funds in your checking account. Instead, the bank covers the shortfall and charges you an overdraft fee.

This can be useful for those who struggle financially. For instance, it can help keep crucial services like electricity or internet from getting shut off if you can make a payment by putting your account into overdraft. It is a convenient feature, but it often comes at a high cost.

Alternatives to Standard Overdraft Services

Instead of traditional overdraft protection, consider setting up a link to a savings account or a line of credit. These alternatives typically come with lower fees. Some banks also offer overdraft lines of credit, which work like a loan to cover overdrafts.

Link a Savings Account for Overdraft Protection

Linking your savings account to your checking account for overdraft protection can be a smart move. If you overdraw your checking account, funds are automatically transferred from your savings to cover the shortfall. There may be a fee for this transfer, but it’s usually less than an overdraft fee.

Setting Up Account Alerts to Monitor Balance

One of the best ways to avoid overdrafts is to keep a close eye on your account balance. Many banks offer free alerts that notify you via text or email when your balance falls below a certain amount. This proactive approach can help you manage your funds more effectively and avoid the need for overdraft protection altogether.

Reduce ATM Fees

ATM fees can add up quickly, especially if you frequently withdraw cash from machines outside your bank’s network. Here are some strategies to help you save on these fees.

Use Your Bank’s ATM Network

Always try to use ATMs that are within your bank’s network. These ATMs won’t charge you for withdrawals. Many banks have a locator app or online tool to help you find the nearest in-network ATM.

Understand Partnerships Between Banks for Fee-Free ATMs

Some banks form partnerships with other bank networks or ATM consortia to offer their customers wider access to fee-free withdrawals. Check if your bank is part of any such network, and make use of these ATMs when possible.

Plan Cash Withdrawals to Minimize ATM Visits

To reduce the number of times you need to use an ATM, plan your cash withdrawals. Withdrawing larger amounts less frequently can minimize the number of times you pay ATM fees, especially if you must use out-of-network machines.

Use Cash Back Options at Retailers

Many retailers offer cash back when you make a purchase with a debit card. This can be a great way to get cash without paying ATM fees. Just be mindful of your spending – it’s easy to make unnecessary purchases when seeking cash back.

Minimize Foreign Transaction Fees

Foreign transaction fees can significantly increase the cost of purchases made abroad. Here’s how you can minimize these fees while traveling or making international transactions.

Choose a Bank Account with No Foreign Transaction Fees

Some bank accounts and cards specifically offer no foreign transaction fees. These are ideal for travelers. Research and compare different banks to find accounts that offer this benefit.

Use Credit Cards Instead of Debit Cards Abroad

Credit cards often have better foreign transaction fee policies compared to debit cards. Some credit cards even offer perks like travel rewards and don’t charge any foreign transaction fees. However, always be aware of the potential for high interest rates on unpaid balances.

Consider Prepaid Travel Cards

Prepaid travel cards are a secure and convenient alternative to carrying cash or using your regular bank cards abroad. These cards can be preloaded with a specific currency and used like a debit card, often with lower fees and better exchange rates than traditional bank cards. Just be sure to check for any associated fees before purchasing a pre-paid card.

Go Paperless: Avoid Paper Statement Fees

In an era where digital convenience is king, going paperless is not only environmentally friendly but also a smart way to avoid unnecessary bank fees.

Sign Up for Online Banking and E-Statements

Most banks offer the option to switch to electronic statements, often referred to as e-statements. By opting for online banking, you can avoid paper statement fees that some banks charge. The process usually involves logging into your online banking platform and changing your statement preferences.

Benefits of Digital Banking Beyond Avoiding Fees

Apart from dodging paper statement fees, online banking offers several other advantages. It provides easy access to your transaction history, instant fund transfer capabilities, and the convenience of managing your finances from anywhere. Digital banking can also facilitate better financial tracking and budgeting.

Keep Digital Records Secure

While online banking is generally secure, it’s important to take steps to protect your financial data. Use strong, unique passwords for your banking accounts and avoid accessing your bank account on public Wi-Fi networks. Regularly monitor your accounts for any unusual activity to help ensure your financial security.

Avoiding Account Closure Fees

Closing a bank account might seem straightforward, but it can come with its own set of fees if not done carefully.

Understand the Terms and Conditions for Closing an Account

Before closing an account, it’s vital to read the fine print. Some banks charge a fee if you close your account within a certain timeframe after opening it. Make sure you understand any such conditions to avoid unexpected charges.

Time the Closure to Avoid Fees

Timing can be everything when it comes to avoiding closure fees. If your bank imposes a fee for closing accounts within a specific period, it’s wise to wait until this period has elapsed. Additionally, consider the timing of any direct deposits or automatic payments that might be linked to the account.

Transfer Funds Appropriately Before Account Closure

Before closing your account, ensure all your funds are properly transferred out. This may involve transferring money to a new account, paying off any outstanding debts linked to the account, or converting any investments. Double-check for any pending transactions to avoid complications during the closure process.

The Basics of Bank Fee Policies

Successfully avoiding bank fees isn’t just about knowing what to avoid; it’s also about understanding how your bank communicates and applies these fees. Here’s how to stay on top of your bank’s fee policies.

Regularly Review Fee Schedules and Notices

Banks often update their fee schedules and terms of service. Stay informed by regularly reviewing any updates to these documents. Most banks send out notices of changes to their fees or terms, so pay attention to any communication from your bank, whether via mail or email.

Understand Your Bank’s Fee Structure

Take the time to understand the specific fees your bank charges and under what circumstances. This might include fees for account maintenance, overdrafts, using ATMs outside the network, foreign transactions, and more. Knowing these details can help you make informed decisions about how to use your accounts and avoid unnecessary charges.

Advocate for Yourself: Negotiate and Dispute Fees

If you’re charged a fee that you believe is unwarranted, don’t hesitate to contact your bank. Many banks are willing to waive fees, especially for customers in good standing or those who rarely incur fees. Be polite but firm in your communication, and if you have a valid reason, don’t be afraid to negotiate or dispute the charges.


Avoiding bank fees is all about being informed, proactive, and strategic. Choose the right bank account, understand and meet the criteria to avoid fees, use in-network ATMs, go paperless, and be aware of foreign transaction charges. Also, keep an eye on your account to avoid overdrafts and understand your bank’s fee structure.

Staying informed about your bank’s policies and being proactive in managing your accounts is essential. Regularly review your bank statements, keep abreast of any changes in your bank’s fee structure, and don’t hesitate to reach out to your bank for clarifications or to dispute charges.

Smart banking practices help in avoiding unnecessary fees and empower you to take control of your financial health. By being mindful of the ways banks charge fees and taking steps to avoid them, you can save money and use it for more important financial goals, like saving, investing, or spending on things that truly matter to you. Remember, every dollar saved in fees is a dollar that can contribute to your financial freedom and well-being.

Dawn Allcot
Meet the author

Dawn Allot is a personal finance writer and content marketing expert specializing in finance, travel, real estate, and technology. In addition to her work at Crediful, Dawn regularly writes for Bankrate, GoBankingRates, and The Balance.