The truth is, every adult should have at least one bank account. The most basic type of a bank account is a simple checking account which allows users to deposit and take out cash at their discretion.
Bank accounts are crucial for those who have jobs – as you need a place to deposit paper checks or accept paycheck deposits. They are also very important if you want to apply for a loan, a mortgage, take out a credit card, and more.
The reason why is lenders will often want to see how much you have saved up. While it doesn’t necessarily impact your credit score, it can certainly impact what you are able to qualify for in terms of a loan.
The one downside to bank accounts is that they often come with potential fees. Whether it is an annual fee, an overcharge fee, or something in between, it is important to know what you may be subjected to should you decide to open a new bank account.
Some of the most common bank account fees
There is a long list of fees that you could face when you open a bank account, but it’s really important to know the most common ones the best. Here is a list of many of those common fees.
Monthly Account Maintenance Fee
One of the most common and simple fees that banks charge is a monthly account maintenance fee for your checking and savings account.
There are simple ways to avoid these fees such as keeping a certain amount in your account, charging a debit card connected to the account a certain number of times per month, or depositing or withdrawing a certain amount per month. If you do not meet these requirements, however, you could be subject to a fee that is believed to average around $13 per month.
Minimum Balance Fees
Many banks will reduce or take away the monthly maintenance fee if you maintain a minimum balance in your account. That minimum balance typically can be anywhere between $500 to $1000 or even more.
Unfortunately, if you end up falling below that minimum, you will have to pay the fee for that month.
Obviously this is one of the fees you really want to avoid, it is also unfortunately one of the most common fees people face. You face an overdraft fee if you overdraft your account, that means that you spend more money from your account than what is actually in it.
This can happen when you write a check, use a debit card, or even initiate an online transfer or automatic withdrawal.
If you overdraft your account by using a check, you will likely not only face an overdraft fee which averages out to be approx. $33, you could also face a bounced check fee which will likely be worth even more.
Lost Card Fees
This is another common fee and only will occur if you lose your debit card that is attached to your bank account. If you lose your card and need it replaced you will likely face a $5 fee for a new card or a $30 charge for a rush service. A rush service is useful because regular replacements can take a week or even longer.
Foreign Transaction Fees
If you have loved ones or business partners that live across the pond, chance are good you are going to have to send money internationally at some point. This can come with a pretty hefty fee and the most common related fee is worth 3% of the amount you send internationally.
You could also very likely face a fee if you travel internationally and either take money out or use your card to pay directly in a foreign country. To easily avoid this, you can simply take out a large sum of cash prior to leaving the country and exchanging it at an airport once you reach your final destination.
How to Limit Bank Fees
Now that you know some of the most common bank fees that you may face, you probably want to learn about how to limit the chances that you will face expensive fees.
Luckily, there are quite a few ways to do just that!
Make sure to look around for the right checking and saving accounts that come with low fees. It is also wise to look not only at brick and mortar banking options but at online banking options as well.
Often, online banking options offer lower fees and higher interest rates because they don’t have to worry about upkeep costs when it comes to having branches and brick and mortar buildings. Jeremy Hughes of Perth, former executive at Get Approved Finance, Western Australia suggests “Online banking can be a great way for someone who does not need to access a physical store to save on fees and charges”
Read the Fine Print
Before you sign up for any account, it is smart to read the fine print and see what it says about fees that you may face. It’s a good way to get the information that your bank may not necessarily want you to know right off the bat.
Check Your Account Statements
Make sure that you are keeping an eye on your monthly account statements to see if there are any unexpected fees that you accrue over time. Keeping an eye on that will not only make it so that you know you are not being charged in error, and will also inform you how to avoid charges in the future.
Meet Minimum Balance Requirements
If you can’t find an account with no minimum balance requirement that you think is a good option for you, make sure that you are able to maintain that minimum balance to avoid any related fee. It’s a super easy way to avoid having to pay fees in the future.
Use a Credit Card
If you have a debit card that charges transaction fees, consider using a credit card for your day to day payments. As long as you stay up to date with your credit card payments, they can be a great asset to not only get points and cash back rewards, but also to build a healthy and useful credit score.