By Rita Cunha | February 2, 2021

Have you ever been surprised by unexpected fees in your bank statement? If so, you are not alone. Hidden bank fees are very common—and every bit as annoying. While these bank fees don’t seem like a lot, they can quickly add up and eat a chunk of your savings or checking account. Knowing what they are and how to avoid them is a must in personal finance.

Today, we will go over the fees you are most likely to be charged, from monthly service fees to overdraft fees. We will also show you some tricks to get rid of these pesky charges and even direct you to some fee-free banks to look into! Let’s get to it.

What Are Hidden Fees in Banking?

Hidden fees are charges you end up paying but didn’t know existed. You might not have been told about these fees when you first opened your savings or checking account. Yet, they were all listed and explained in the fine print we tend not to read all the way through.

As we all know, financial institutions are in the business of making money. They invest the money their clients deposit. However, there are also costs of operating to consider. For many banks, charging their customers these extra fees is how they cover their expenses (and then some). But because they don’t want to miss out on new customers by warning them of hidden fees, they conceal them in the contracts we sign. Clever, right?

Some banks are more notorious than others for surprising their customers with these hidden fees. A quick search for reviews of the top banks in the United States will show you the main culprits. Plus, as a rule of thumb, online banks tend to charge lower fees (or not charge them at all) because they have lower costs of operating.

8 Hidden Bank Fees You Want to Avoid

Now that you know what hidden bank fees are, let’s get into which charges you are most likely to see on your bank statement.

1. Minimum Balance Fee

A lot of banks have a minimum balance fee. If you let your checking account balance dip below that minimum balance, you will have to pay a fee. How much you are charged varies from bank to bank. 

There are ways around this charge. For starters, you can check your bank’s mobile app to see how close you are to dipping below the minimum balance, and then move some funds around to cover you. Alternatively, you could ensure that you get a monthly direct deposit in each statement cycle, as this will often “cancel out” the minimum balance requirement.

2. Monthly Maintenance Fee

Monthly maintenance fees are a lot more common. You end up being charged anywhere between $3 and $30 just to have your checking account or savings account open.

In most cases, these monthly fees aren’t negotiable. However, some banks are willing to wave these charges if you agree to some terms. Usually, these include signing up for a “paperless” savings or checking account (meaning you won’t get paper statements anymore) or setting up monthly direct deposits. If you have ever been surprised by maintenance fees, it’s worth reaching out to your bank and seeing if they are negotiable.

3. Overdraft Fee

Let’s imagine you want to buy something but don’t have enough money in the bank. Your bank will cover the difference for you, but you will have to pay overdraft fees. They range anywhere from $20 to $50, which is quite substantial. Think of these charges as a fine to discourage you from overspending in the future. 

If the thought of over-drafting your checking account makes you shiver, it’s a good idea to sign up with a bank that offers overdraft protection. This way, your checking account balance will never dip below zero, meaning you won’t be surprised by overdraft fees.

4. Non-sufficient Funds Fee

Other times, your bank won’t cover your over-spending and will issue a non-sufficient funds fee. This means your debit card will get declined. Unlike when you go into overdraft, you can’t complete your purchase. If you issued a check and it bounces, then this charge is also known as a return item fee.

Insufficient funds fees and return item fees can cost you just as much as overdraft fees. 

5. ATM Surcharges

When you withdraw money outside your bank’s ATM network, you pay an ATM fee. It could be anywhere from $0.50 to $5 per transaction.

There are only two ways of avoiding ATM fees. First, you can use free ATMs (such as MoneyPass or Allpoint) or ATMs belonging to your bank’s credit union. You will have to do your research to find out which ones won’t charge you. Secondly, you could switch to a bank that gives you cashback on all debit card ATM withdrawals and use whatever ATM you come across without worrying about fees.

6. Foreign Transaction Fees

If you go abroad and use your card to pay for things, you might get a foreign transaction fee. This is usually a 2-3% charge for converting your currency. Yes, it applies to you even if you make cash-back debit card purchases (but your cash-back rate might offset this charge).

7. Bank Transfer and Wire Transfer Fee

Every time you make a bank transfer or a wire transfer, your bank will likely add on a fee for that service. This isn’t as common if you’re enrolled in a credit union, and large banks are the most notorious for their high fees when it comes to transfers.

8. Late Credit Card Payment Fee

If you haven’t paid your credit card on time, you will get charged a penalty fee. It is supposed to force you to pay your bills on time and it can quickly add up into large amounts of debt. That is why credit cards are financial products to always handle with care—despite them being so popular and used across the country!

Can Hidden Fees Be Avoided? 5 Tips to Save Money

Have all those hidden fees scared you? Don’t worry. Fortunately, there are ways to avoid most (if not all) of them.

1. Read the Fine Print

Banks will dazzle you with all kinds of perks so you will open a savings or checking account with them. They will show you swanky VISA debit card cashback rewards, rewards checking accounts, high yield savings account programs with a great interest rate, and so on. They want you to sign on the dotted line on the spot.

Before you do, ask if they offer a free checking account and inquire about minimum balance requirements, overdraft policies and fees, and ATM surcharges. Then, when you learn how much they would charge you in those fees, consider if you really want an account with that bank.

2. Stay on Top of Your Statement

Looking at your daily balance is a good habit to get into. This way, you can check if you are being charged for fees you didn’t know existed.

That is why having an online checking account or getting a mobile banking app is a good idea. Chime, Charles Schwab, and Axos all offer this type of service. Your bank might also have an online banking system worth checking out.

3. Dispute Wrong Charges

If you think you were charged incorrectly, dispute the charge. Sometimes, banks will incorrectly issue fees you shouldn’t have to pay. Reimbursements are always an option—just make sure to gather proof to make your case.

4. Before Signing Up, Do Your Research

Never open a bank account without doing your own research. It doesn’t matter if they are well established (for example, Bank of America and Chase) or lesser-known and smaller (like Ally, Discover, Capital One, or Axos). Read the bank’s FAQs and look into their customers’ reviews. If you see a lot of people complaining about their hidden fees and poor customer service, you’re probably better off skipping that bank.

You don’t have to settle for a bad bank to get a good annual percentage yield (APY) on your savings account. Nor do you have to pay exorbitant fees to get a safe checking account either. There are plenty of FDIC-insured fee-free banks that offer great financial products and accounts! All it takes is some research.

5. Switch to a Better Bank

If you have decided to switch to a better bank, Swagbucks has some options to save you (and make you!) money. These no-fee checking accounts offer the services you need in your day-to-day, from online bill pay features to rebates and easy, no-frills direct deposit options. Plus, you won’t have to pay monthly service fees!

How Can I Transfer Money Without Fees?

Remember these affordable alternatives to transferring money between accounts with no fees.

1. PayPal

PayPal is an internet giant for a reason. It oversees millions of transactions every week and takes very little commission from each transfer. Plus, you can do it all from your phone.

2. TransferWise

TransferWise is an even cheaper alternative to PayPal, especially if you are converting dollars to another currency. Creating an account is easy and safe, too.

3. Zelle

Zelle is another fast and cheap way of transferring funds. Your money will be in the recipient’s account in just a few hours if you do the transaction on a business day. How great is that? Plus, since most banks have agreements with Zelle, you won’t have to pay a dime to receive your money transfer.

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