Common banking fees and how to avoid them

In a nutshell

Banks and credit unions charge various fees to use their checking and savings accounts, but you can avoid many of them.

• On average, more than one in four Americans pay $24 a month in banking fees.
• The most common fees include out-of-network ATM fees, overdraft fees and wire transfer fees.
• Some checking and savings accounts have minimal fees or offer ways to avoid these costs.

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What are banking fees, and why do they occur?

Bank fees are any fees your bank charges for using their products and services. For instance, your bank may charge a monthly service fee to maintain your checking account, ATM fees when you withdraw cash at a machine outside your bank’s network and overdraft fees when your balance dips below zero.

About a quarter of Americans pay $24 a month on average on banking fees, according to Bankrate’s 2023 checking and ATM fee survey. These fees generate revenue and cover operational costs for banks and credit unions. Online banks typically have lower overhead costs compared to brick-and-mortar institutions; they may pass on these savings to customers in the form of fewer fees.

However, any fees you pay will add up and potentially cost thousands of dollars over time. So it’s a good idea to understand banking fees and avoid them when possible. When you’re shopping for a new checking account or savings account, take the time to compare multiple accounts and go over fee schedules. Consider your banking habits and whether you’re likely to pay any of the charges. Choose the account that offers services you’ll use while charging the lowest fees.

Common banking fees and how to avoid them

For every banking fee, there’s typically a way to avoid paying it.

Monthly maintenance fee

Monthly service fees cover the costs of maintaining your checking or savings account. They vary with every bank — and the type of account you have — but usually range from $5 to $15 each month.

Many banks waive the fee when you meet certain requirements. For instance, some institutions won’t charge the fee if you keep a certain minimum balance in the account or set up direct deposit. And some banks and credit unions don’t charge the fee at all, no matter what your balance is.

Out-of-network ATM fee

Banks and credit unions typically offer a network of ATMs you can use without paying fees. But if you venture outside the ATM network, you may pay charges from both the ATM provider and your bank. According to Bankrate's survey, these fees will cost you $4.73 on average.

Avoid this type of fee by using your bank’s mobile app or website to find an in-network ATM near you. Alternatively, you can do a cash-back debit card transaction at a retailer that offers them.

Overdraft fee

Banks can also charge you when you spend more money than the amount in your checking account and wind up with a negative balance. The Consumer Financial Protection Bureau estimates 23 million Americans pay this fee in any given year, and each spends up to $35 per incident. But there are some ways around it:

• Sign up for overdraft protection. With overdraft protection, your bank agrees to cover overdrafts up to a preset limit. The service may come with a fee, but it’s typically lower than the overdraft fee.
• Prevent overdrafts. You can set up low balance alerts to receive a notification when your account balance drops below a certain threshold.
• Find an account that doesn’t charge overdraft fees.

Nonsufficient funds (NSF) fee

A nonsufficient (or insufficient) funds fee penalizes you when there’s not enough money in your account to cover a purchase and the bank rejects the transaction. The fee may cost around $20 per incident. You can avoid NSF fees by keeping a close eye on your balance or signing up for low-balance notifications.

Stop-payment fee

Some financial institutions let you cancel an electronic money transfer or a paper check before it’s been processed. But stop-payment requests may come with a fee. This varies between banks but typically costs around $30 to $35 per request. In some cases, you can keep the ability to stop payments but avoid the fee by using a different payment method. For instance, some banks won’t charge a stop-payment fee for debit card and bill-pay transactions.

Check-ordering fees

When you open a checking account, your bank may provide you with a free booklet of checks. But you’ll usually need to pay for any extra checks after you’ve finished the initial supply. Ordering them from your bank is usually the most expensive option: around 30 cents per check. You can lower this cost by ordering checks from a third-party service or choosing a bank that provides an ongoing supply of free checks.

Inactivity fee

If a few months go by without you using your checking or savings account, your bank may add an inactivity fee to your next statement. Also known as a dormancy fee, it usually kicks in when you’ve gone six months without making any new transactions. If your bank charges this type of fee, it can range from $5 to $20.

You can avoid this fee by using the account regularly. If it’s not your main account, you could consider setting up a recurring deposit or withdrawal.

Wire transfer fee

A wire transfer lets you instantly move money from your bank account to another, but it isn’t free. The fee you pay depends on a few factors, but it’s usually around $25 for domestic transfers and $45 for international transfers.

You may be able to avoid wire transfer fees by using another form of payment, such as a paper check, an ACH transfer or a mobile payment application (such as Venmo or Zelle).

Paper statement fees

Financial institutions usually prefer sending you e-statements because they’re more private and less costly. If you choose to receive paper statements, your bank or credit union may charge you for printing and mailing a copy each month. Paper statement fees often range from $2 to $5 each time you receive one, but you can avoid them by logging into your account and registering for the paperless option.

Excessive transactions fee

In the past, a federal regulation restricted consumers to making six “convenient transfers and withdrawals” each month. Go over the limit, and you’re on the hook for the excessive transaction fee. Banks and credit unions can now choose whether to set monthly transfer and withdrawal limits (and how much). Institutions that charge an excessive transaction fee typically charge between $3 and $25 per transaction. You can get around the fee by using your checking account as your everyday account for routine withdrawals, like paying bills.

Account closing fees

Some banks charge a fee when you close an account within a certain time after opening it — typically around 90 to 180 days. These early closeout fees range from about $20 to $50 and they help banks retain customers — and prevent new customers from taking advantage of welcome bonuses and then moving on to a new bank.

You can avoid the fee by opening an account at a bank or credit union you plan to work with for the long term.

The AP Buyline roundup

Checking and savings accounts may come with fees, and these fees can add up over time. The best way to avoid these fees is by shopping around for the best bank account that doesn’t charge fees or waives them when you meet requirements. Online banks typically charge fewer fees because they have lower overhead costs.

Frequently asked questions (FAQs)

Which fees are the most common?

Out-of-network ATM fees, wire transfer fees and overdraft fees are typically the most common fees charged by banks and credit unions.

What is the most expensive bank fee?

Overdraft fees, stop-payment fees and wire transfer fees are typically the most expensive banking fees. However, the costs vary by financial institution.