Finance & Economics

Types of bank fees and tips on how to avoid them

We have prepared an overview of the bank fees applicable in various situations as well as the ways to avoid them

bank fees

Types of bank fees and tips on how to avoid them. Source:

Due to tough competition in the banking industry, many financial institutions offer their most basic services free of charge. However, banks must still profit somehow. Therefore, there are long lists of services which do incur certain fees. Some of those charges are quite transparent, while others remain unacknowledged before the transaction takes place.

Maintenance fee

This fee is typically charged monthly, though some financial institutions charge their customers once a year. Anyway, the maintenance costs are always straightforward. The conditions are announced once you apply for an account. The bank charges a maintenance/service fee to keep the account open, process your transactions etc. The typical fee amount is between $4-15.

How to avoid it: Not all types of accounts are subject to maintenance fees. Yet, checking and savings accounts usually incur those charges. Some exceptions are offers of online banks. Many banks provide certain requirements for account holders to qualify for a fee-waiver. For example, you may need to keep a certain minimum account balance, accept monthly direct deposits from your employer, use other products of the same bank, or belong to a certain social category (student, retiree).

Cash withdrawal fee

Most banks provide free cash withdrawals through domestic ATMs and some partner institutions. However, when you withdraw cash at an out-of-network ATM, you typically face a fee of about $5-8. This cost is usually composed of two parts: amount charged by your bank plus the amount charged by the ATM operator. Cash withdrawals abroad typically incur a flat fee up to $5 for using an ATM network in another country, plus 1-3% of the withdrawal amount. Some banks may refund part of such expenses. Yet, the refund is usually very limited. Furthermore, not only out-of-network withdrawals can cost you additional money. Banks may also charge for withdrawals over a certain maximum daily/monthly amount, disregarding the ATM type.

How to avoid it: Obviously, sticking to cashless transactions will save you from the withdrawal fee. If you do need cash, use the ATM locator in the banking app to find the nearest branded cash machine. In case you are far from the in-network ATMs, consider the withdrawal limits which apply to the fee reimbursement policy.


This form of credit allows you to spend more than you have in your account at the moment. At the same time, overdraft fees may leave you regretting the spending urge. On average, American banks charge about $35 for the extra costs they loan as an overdraft. If a checking account goes negative for more than a few days, many banks also charge an extended overdraft fee.

How to avoid it: You can opt out of automatic overdraft coverage altogether while signing up for an account. If this feature is important for you, look for a bank that doesn’t charge for small overdraft amounts. Regularly check your account balance so that you don’t go over the limit. Set up notifications to remind you when your balance is getting low. You can also opt for an overdraft protection service. In this case, the bank doesn’t lend you money. It uses your other account to cover insufficient funds. However, some transfer fees will also apply. Those are usually lower than the ordinary overdraft fee, but may incur an excessive transaction fee if you use a savings account as a cushion.

Excessive activity fee

US federal laws restrict withdrawing money from a savings account more than six times per month. If you withdraw more often, you’ll pay a penalty fee from $3 to $25, depending on the bank. Some banks also begin applying the fees at the threshold of three withdrawals per month. The transactions that count towards withdrawals include wire transfers, moving money between accounts, paying bills, covering for overdraft protection, and cash withdrawal at ATM.

How to avoid it: Use your checking account for routine withdrawals. Don’t automate transactions from your savings account. Avoid directly depositing paychecks or other regular payments into your savings account. This increases the chance that you will need to transfer money. Be careful about overdraft protection. Use a line of credit as a backup for checking account overdrafts instead of your savings account.

Insufficient funds

Opting out of overdraft is not always cost-effective. If you’re not attentive enough and attempt making a transaction that exceeds your account balance, the amount will not simply bounce back. Bank fees for insufficient funds by failed transactions may cost you up to $35. Additionally, a penalty may be charged by the merchant for the returned check. The fee is also known as Returned Item fee as the bank charges you for the trouble of sending your insufficient money amount back to your account.

How to avoid it: Sign up for automatic alerts that notify you when your balance is low. Look out for debit card transactions and automated payments, which are easy to forget about. Many banks also offer overdraft lines of credit up to $1000. Fill in a credit application if you wish to have one.

Wire transfer fee

Wire transfer is an electronic payment service for transferring funds by wire systems (SWIFT, Fedwire or the Clearing House Interbank Payments System). These transfers are quick and secure, but they may cost you $5-50. The fees vary based on the financial institution, the amount of money you’re transferring and where the money is going. Sometimes the receiver is also charged a fee of $15-20.

How to avoid it: Use a payment or money transfer app (e.g. Zelle) to send money for free. Sending money from your online PayPal balance (or linked bank account) domestically also doesn’t incur transfer fees. Some banks waive certain incoming wire transfer fees, but not the outgoing ones.

Account closure

Banks have certain rules regarding new accounts. Namely, you must not close your account too early (3-6 months after opening). Otherwise, you’ll face a penalty fee of about $25.

How to avoid it: Read the bank’s policies carefully. Don’t open an account if you need it for a short term. Keep the new account open and maintain the required minimum balance there for the first 90-180 days at least.

Branch usage fee

A fee unknown to American customers is now increasingly applied in the EU. Customers visiting a branch for a service they could access online may pay around two euros for the privilege.

How to avoid it: Check if you can perform a transaction/withdrawal online, without addressing the branch employees.


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