Whether you’re new to banking or you’ve had a bank account for years, you can still get hit by outrageous bank fees that banks won’t tell you about. These can be extremely frustrating, not only because you may not feel like they are justified, but also because the bank may not have told you about them. Keep reading to learn what some of the most common unexpected fees are and how you can avoid them.
- Early account closure fees: Did you know that some banks require you to keep your account open a certain amount of time? If you don’t, they may charge you a fee to close your account! Generally, the fee runs around $25 dollars. Banks include fees like these to try to keep people from closing their accounts, because there are costs to them associated with opening and closing accounts. Frequently, there is no fee after 90 days, because account closures fall off naturally after three months.
- Minimum balance fee: Banks have costs associated with having a customer’s accounts, overhead, servers, staff, etc. To ensure that they don’t lose money on customers’ accounts, they sometimes impose a minimum balance fee. Customers whose balance drops below the minimum are charged a penalty, usually something like $15 or $20 dollars. To avoid this fee, simply make sure that your balance never falls below the minimum. Though sometimes this is easier said than done!
- Redeeming rewards points fee: You’d think banks wouldn’t charge you for taking advantage of a perk they used to get you to open an account with them, but you’d be wrong. Some companies charge you for things like using your reward points to purchase airline tickets using your points (up to $24 per ticket!). Fortunately, these types of fees aren’t common. If you want to avoid these fees you’ll have to shop around and compare each banks’ reward point policy.
- Withdrawal fee: If you make more than six withdrawals from your savings account in a month, you’ll be charged an excessive withdrawal fee. This fee is normally $15 dollars. It isn’t an attempt by banks to take advantage of you, rather it’s a requirement of Regulation D from the U.S. Securities and Exchange Commission. This helps encourage stability in savings accounts, which in turn helps banks keep the level of cash reserves that they need to comply with applicable laws.
- Paper statement fees: In an effort to save money on paper, many banks are charging customers for receiving a physical monthly statement. Some banks also charge you if you order a paper statement, even if you have paperless billing. This fee is actually one of the easiest to avoid; all you have to do is switch to paperless billing! Generally, all you have to do is change your settings online. Once you’ve done that, you’ll normally start receiving email notifications when your statement is available to be viewed online.
- Foreign transaction fee: Do you use your credit or debit card when traveling internationally? If you do, you’re probably being charged a conversion fee. This fee can be something like 5%, which is nothing to sneeze at if you’re on a three-week trip to Europe! Banks justify these fees because there’s a much higher potential for fraud through international transactions and it therefore costs the bank more money to protect their customers.
- ATM fees: Coupled with something like a foreign transaction fee, ATM fees can end up being quite expensive. Normally, when you’re charged an ATM fee, it’s a fixed amount of money, rather than a percentage. Not only that, but usually the owner of the ATM charges you a fee and so does your bank. The best way to avoid these is to stick to using your own bank’s ATMs.
- Returned mail fee: Normally, when you move you have your mail forwarded. The post office provides this service to you and everyone is happy. Sometimes your bank isn’t though. They put “return service requested” on their envelopes. If they can’t be delivered, they get returned to the bank. Some banks charge you for mail that is undeliverable. This is justified by banks because sometimes returned mail is an indicator of identity theft and can trigger other actions by the bank. The easiest way to avoid this is to simply update your address before you move.
One of the ways you can avoid bank fees is by having larger balances and multiple accounts with the same bank. The more intertwined your relationship with the bank, more free things and fee waivers you can expect. If you’re a longtime customer of a bank, they may be willing to waive a number of fees. All you have to do is ask. This is because it’s almost always cheaper to keep an existing customer than it is to attract a new one.
You don’t have to let your day be ruined by outrageous bank fees that banks won’t tell you about. Now that you know what some of the more common fees are, you can avoid them, whether that means switching banks, being smart about your deposits, or something else entirely. Banking doesn’t have to be a headache.