How to Foil 5 Common Bank Fees From Draining Your Funds

Savings and checking account fees — sometimes tucked away in the depths of a website’s fine print — often crop up on our bank statements when we least expect them. But leave them unchecked and they can cost you several hundred dollars a year in extreme cases.

Knowing how and when banks or credit unions can charge fees is the first step to avoiding them. Here are five of the most common bank fees that can drain your funds:

1. Minimum balance or monthly fees

Many financial institutions charge for simply maintaining an open checking or savings account. The good news is that most accounts provide a way to avoid the charge if you meet specific criteria, such as linking direct deposits or maintaining a balance over a certain dollar amount.

But even that can be a challenge for many people. Kathryn Hauer, a financial planner in South Carolina, says monthly maintenance fees are among the most frequent fees her clients encounter. Switching to a different account, bank or credit union with fewer fees can save money in the long run.

2. Out-of-network ATM fees

Your bank could have up to tens of thousands of ATMs in its network. But if you have to use an ATM that isn’t, you’ll be hit with an out-of-network ATM fee. These fees typically hover in the $3 range in the U.S., but they can climb up to $5 for using ATMs abroad.

Most banks have mobile apps that let you locate in-network ATMs nearby. Keep these handy when you’re out and about. Or consider opening an account at a financial institution that reimburses out-of-network ATM fees.

3. Overdraft fees

Overdraft fees are charged by a bank when a customer has agreed, sometimes without fully knowing the costs, to get overdraft protection. That’s when a bank lets your debit card transaction go through, even if you don’t have enough money in your account to cover it. But you’ll be charged for this protection, a median of $35 at large banks, according to a 2016 report by the Pew Charitable Trusts. Americans overdraw their accounts an average of 2.07 times a year, according to a NerdWallet analysis of data from the Consumer Financial Protection Bureau.

Opting out of overdraft protection — which means your debit card transaction will be declined if you don’t have enough money in your account — will save you money. Signing up with the financial institution for low-balance alerts will let you know when the money in your checking account falls low.

If you get hit with an overdraft fee, there still are some measures you can take. Hauer recommends reaching out to your bank to ask if you can get overdraft fees canceled or reduced as soon as you see them. That’s more likely to happen if you don’t overdraw often, Hauer says.

4. Foreign transaction fees

Debit cards are convenient overseas. They’re your key to withdrawing foreign currency from ATMs and likely are accepted by thousands of merchants worldwide. But they can come with foreign transaction fees of 1% to 3% every time you use the card at an ATM or store. Add that to the out-of-network ATM fee you’re probably paying and the charges can quickly pile up.

If you want to avoid a foreign transaction fee, open an account at a bank that doesn’t charge one. Otherwise, using credit cards with no foreign transaction fees at stores abroad can do the trick.

5. Paper statement fees

If you get paper statements for your account, you could be paying for them. About 25% of banks that offer such statements charge a fee for them, according to analytics firm Novantas. Though the fees are no more than $3 typically, you can avoid that and save the money for a rainy day.

A simple fix is to opt for electronic statements, which you can download for free.

But sometimes, paying a smaller fee could help you avoid a larger one, depending on your habits and personal preferences.

Anna Sergunina, a financial planner in California, recalls a client who chose to receive paper statements and pay a fee. The client was racking up overdraft fees because she wasn’t keeping an eye on her account balance, and electronic statements emailed to her “were just going into a black box,” Sergunina says. “When [my client] gets a statement that comes in the mail, she’s compelled to open it because it’s there.”

The best way to keep fees at bay? Sergunina and Hauer both agree on this point: Check your account statement regularly.

“Look at your expenses. Pull your bank statement. See what are the charges that are recurring,” Sergunina says. “If you got hit once, twice, like an ATM fee or something, that’s probably OK. But if it’s something that happens constantly, then that’s when it becomes a waste of money.”

Learn more about bank fees on NerdWallet

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