8 bank fees explained and how to avoid them

By Kate Gillan | Citizens

In today's busy world, you need a bank account that fits your lifestyle. You need an account with low fees that will work for you — one for your everyday needs, without the runaround. By researching different checking accounts and their fees, you can choose the account that works best for you.

When you open a new bank account, it's a good idea to find out about the bank fees upfront. Finding an account that has no charges at all isn't likely as banks have to have some guidelines for account activity, but it's easier than you may think to avoid bank fees.

Fees can include charges for a variety of certain account activities, such as making overdrafts, falling below a minimum balance and using out-of-network ATMs. Here's what to know about eight of the most common bank fees:

What it is

To cover operating costs, banks may charge a monthly maintenance fee for the account for their services. The fee is also sometimes referred to as a monthly service charge and is automatically withdrawn from your account.

Estimated cost

Monthly account maintenance fees are usually $5 to $25 per month.

How to avoid it

It's important to know about your account's monthly maintenance fee so you can work it into your budget and manage your finances accordingly. Many banks will lower or even waive these fees entirely if you maintain a certain minimum balance.

What it is

You might have made a debit or check purchase thinking you had enough money in your account only to get an email or text from your bank saying you're overdrawn. This happens because your bank balance doesn't necessarily update in real time. So your debit card or check may not be declined at the time of purchase, but when the account settles and you don't have enough money, the bank temporarily covers the difference. You'll owe the bank not only repayment of the negative balance but also an overdraft fee.

Estimated cost

Overdraft fees are typically $25 to $35 per overdraft.

How to avoid it

Signing up for direct deposit may help you avoid overdraft fees, so that money is consistently and automatically put into your account. You can also set up low balance alerts that inform you when your account balance falls below a certain amount.

Using a bank that offers overdraft protection can also help you avoid fees. With overdraft protection, you link another account to your checking account, so if your account is accidentally overdrawn, the additional funds are taken from the linked account.

What it is

Some banks require you to maintain a certain minimum balance in your account. For example, you could be required to keep a minimum of $100 in your account at all times. If your balance falls below that amount, you end up with a fee. According to Forbes, typical monthly minimum balances are $25 to $100.

Estimated cost

The typical fee for falling below the minimum balance requirement is $5 per month.

How to avoid it

Accounts with no minimum balance requirements are ideal. But if your account has one, you can track your account balance online or set up low balance alerts to avoid charges.

What it is

An account inactivity fee is also sometimes referred to as a dormant account fee. It is charged when an account has no activity for an extended period, which may be six months to a year or more.

Estimated cost

Bank account inactivity fees can be $5 to $20 per month.

How to avoid it

You can avoid account inactivity fees by making small monthly purchases with your debit card. Setting up a direct deposit or transfer can also help you avoid the fee. Some banks may waive account inactivity fees if you maintain a certain minimum balance or have other accounts with them.

What it is

This is a fee that is charged when you use an out-of-network ATM. When you put your card into the ATM, a message will appear on the screen informing you that it's out-of-network. It will also tell you the transaction fee amount and ask you if you want to proceed.

Estimated cost

Out-of-network ATM fees are often $1.50 to $3.50 per withdrawal.

How to avoid it

Know the difference between out-of-network and in-network ATMs. Banks usually don't charge ATM fees when you use in-network ATMs, meaning that they are owned or affiliated with your bank. To avoid the fee, locate your nearest in-network ATMs by checking online or with a mobile app*. Also, some banks may offer other ATM benefits or fee rebates, so it's worth doing some homework to find one that's right for you.

What it is

Although electronic payments are now common, many people still prefer to write checks. Your bank may charge a fee for checks when you run out and need to order new ones.

Estimated cost

Banks may charge up to around $30 for checks.

How to avoid it

Some banks offer free checks when you meet certain account requirements. You may also be able to minimize your need for checks by only writing them when debit cards aren't accepted — like when you need to pay your monthly rent, make a payment to a local government or make a charitable donation.

What it is

You may find you need to stop a bank from processing a check you have already written. A "stop payment," as it is commonly known, can be made when a check is lost or stolen, for example. It can also be made when there is a problem with a scheduled payment or for other reasons. A fee is charged when a stop payment is made.

Estimated cost

To stop payment on a check, the fee can be $20 to $30.

How to avoid it

When you pay with a check, make sure all of the information is correct. Double-check the amount, payee, date and other information to prevent errors. If you send checks by mail, consider sending them by certified mail to reduce the risk of loss or theft.

What it is

If you make a purchase with your debit card in another country, your bank may charge a foreign transaction fee. You may incur the fee when you travel internationally or if you purchase something online from another country.

Estimated cost

Foreign transaction fees are usually 1% to 3% of the transaction amount.

How to avoid it

Some banks offer debit cards that don't have any foreign transaction fees. They may also have partnerships with international banks that allow you to use their ATMs without incurring any fees.

You don't have to let bank fees catch you off guard. Banks are required to be transparent about their fees, so you should be able to quickly find out when fees are charged and exactly how much they will be. This can prevent surprises and even help you with budgeting.

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