How to Avoid Checking Account Fees

A checking account is a key component of personal finance, enabling easy access to your money. However, having a checking account can come at a price if your bank charges fees, which can add up quickly if you aren’t careful.

According to the Consumer Financial Protection Bureau (CFPB), the average person pays anywhere from $9.87 to $29.09 per month in checking account fees. From monthly maintenance fees to ATM charges and overdraft penalties, these expenses can take a significant toll on your finances if left unchecked.

Let’s explore the most common fees banks charge and strategies on how to avoid checking account fees.

Common checking account fees

Not every bank is on the same page when it comes to checking account fees. Each bank has its own fee structure, and some don’t charge any fees. Before you open a checking account, find out the fee structure at the financial institution you plan to use.

Below is a table of the most common fees that banks charge, what they are for, and how much they typically cost. This is not an exhaustive list, so you should check your bank’s account disclosure for specific information.

Fee	Definition	Typical cost
Monthly maintenance	Fee charged for maintaining and servicing your account	$12/mo
Overdraft/insufficient funds (NSF)	A fee the bank charges if it has to cover or reject a charge because you don’t have enough money in your account	$35 each
ATM	Fees for using an ATM that is out of your bank’s network	$3 per transaction
Foreign transactions	A fee for converting dollars to foreign currency when you make a purchase or withdraw cash in another country	Usually about 3% of the transaction amount
Check ordering	The cost of ordering paper checks through your bank or credit union	$25
Paper statements	A fee charged for sending a paper bank statement	$3
Wire transfers	The cost for the bank sending or receiving money for you either in the U.S. or internationally (these fees usually differ depending on whether the transfer is outgoing or incoming)	Incoming: $15 Outgoing: $30
Stop payment	The fee a bank charges to stop a check or payment from being paid at your request	$30
Card replacement	The cost of replacing a lost or damaged debit card	Free at many banks, charges usually kick in on rush orders
Account closure	A fee charged if you don’t keep your account open for a select period required by your bank (this period can be 60, 90, 180 days or more)	$25

How to avoid incurring these costs

Banks know people hate fees, so to stay competitive and attract more customers, many financial institutions offer options to help minimize fees or eliminate them altogether. By simply setting up direct deposit or maintaining a certain balance on your account, you may be able to avoid incurring bank fees.

While every bank or credit union may be different in how they address fees, here are a few common strategies that can help you avoid them.

Set up direct deposit

Many banks will waive monthly maintenance fees if you have set up a qualifying monthly direct deposit. For example, U.S. Bank waives its monthly maintenance fees on checking accounts if you have combined monthly direct deposits equaling $1,000. At Truist Bank, you can get the $12 monthly maintenance fee waived with direct deposits of at least $500 per statement cycle.

You can easily set up direct deposit of your paychecks through your employer’s human resources department. You will need to provide your bank’s routing number and your account number. Some employers may also need a voided check.

Maintain the minimum account balance

Banks earn their money through interest on the money they hold for you, so they want to encourage you to keep money in your account. As an incentive, some banks waive monthly fees if you keep your account balance at a certain level. For example, Truist Bank will also waive its monthly maintenance fee if you have a minimum balance of $500 in your account each month.

To ensure that you maintain the minimum account balance required by your bank to waive fees, you’ll have to closely monitor your account balance. Setting up direct deposits or automatic transfers from your savings account can help keep your account balance where it should be.

Meet the minimum transaction requirement

Some banks may require you to make a certain number of transactions each month in order to waive monthly maintenance fees. Transactions can be deposits, withdrawals, transfers, debit card charges, or checks. For example, Santander Bank will waive its $10 monthly fee on its Simply Right Checking account if you make at least one transaction per month.

Use in-network ATMs

ATM fees can really add up if you aren’t careful about what ATM machine you take money out of. While many ATM withdrawal fees are about $3, I’ve seen some as high as $7. The higher fee machines always seem to be conveniently placed at businesses and events that don’t take credit or debit cards. I admit, I’ve paid a $4 ATM fee just to buy a $6 beer at a local festival.

To avoid paying a fee to access your own money, use in-network ATMs whenever possible. Many banks use an ATM network like Allpoint or MoneyPass, which have thousands of free-access ATMs across the country.

Some banks may offer to reimburse fees from out-of-network ATMs. For example, Ally Bank will reimburse you up to $10 each statement cycle for ATM fees incurred at out-of-network machines.

Opt into overdraft protection

When you use your debit card or write a check without having enough money in your account to cover the transaction, your bank may deny the charge or pay it for you. However, there usually is a hefty fee. Having overdraft protection on your account can help cover those transactions and save you money on non-sufficient funds fees that you might incur otherwise.

I have had overdraft protection for over 20 years, and it has saved me money on NSF fees, which usually run about $30 per transaction. My credit union provides me with an overdraft line of credit that pays any transaction that comes in when my account is lower than it should be. Until about a year ago, there was no charge for transfering money to cover the overdraft. However, there is now a $3 fee. Some banks enable you to cover overdrafts with money in your savings account at no charge.

If you opt in for overdraft protection at your bank or credit union, make sure to read the fine print because there may still be fees involved. If you have an overdraft line of credit, you may still have to pay a fee to transfer the money, like with my account. Other banks will require you to pay off the overdraft balance within one or two days, or you’ll be charged a fee. For example, GO2Bank provides $200 of overdraft protection, but you have to pay off the balance within 24 hours or you will be charged a $15 fee.

Leverage your relationship with the bank

Banks want your business, so they may waive monthly fees if you have multiple accounts, such as checking, savings, and credit card accounts. For example, Wells Fargo will waive its monthly service fee when you link certain checking and savings accounts.

Open a no-fee account

Several banks offer no-monthly-fee checking accounts without requiring you to jump through hoops like setting up direct deposit or maintaining a minimum balance.

Some of these no-fee banks also don’t require a minimum balance to open an account, but you usually have to deposit money into the account within a certain time frame for it to stay open.

Other strategies

While the steps above can help reduce the checking account fees your bank charges you, it may not eliminate them. Here are a few other things you can do to avoid checking account fees.

• Use a credit or debit card that doesn’t incur foreign transaction fees. My go-to travel card is the Capital One Venture Rewards Credit Card.
• Sign up for electronic account statements. Some banks may charge you for paper statements.
• Ask for fee forgiveness on charges you weren’t expecting. Your bank may refund the fee if you usually don’t incur them. This worked for me when my credit union first started charging $3 for overdraft protection transfers.
• Use a mobile app to keep tabs on your account balance so you can transfer money from another account if you need it. Most banks and credit unions offer their own mobile apps, or you can use a personal finance/budgeting app like Quicken Simplifi or Rocket Money to manage your accounts.
• Use a savings account to cover overdraft transactions. Some banks won’t charge a fee if you use automatic transfers from your savings account to cover overdraft transactions. However, some banks will still charge one, so check with your bank’s fee schedule. My credit union charges $3 to cover an overdraft regardless of whether the funds come from my overdraft line of credit or my savings account.

Recommended checking accounts

Here are a two of our favorite accounts with no monthly fees. 

FAQs

Bottom line

Avoiding checking account fees is mainly about being proactive and taking advantage of options banks provide to help minimize or eliminate these charges. Simple strategies like setting up direct deposit, maintaining a minimum balance, and using in-network ATMs can go a long way in reducing checking account fees. Opting for overdraft protection, leveraging multiple accounts, or choosing a no-fee checking account can help you manage your finances more effectively and avoid fees.

Before you open a checking account, do your research on the best checking accounts available and their policies and fee structures. Staying informed and meeting the necessary requirements can significantly decrease your banking costs and save you money in the long run.