Our lives are filled with all sorts of pesky fees. Everything has a fee, from airline baggage fees, to online ticket transaction fees, to cell phone activation fees. And, of course, bank fees.
Opening a new account comes with pages of disclosures regarding the fees that can be charged. While this is done for full transparency (and because banking laws require it), the fine print and myriad of fees can be confusing. Not to mention annoying.
You may not even realize all of the fees that your bank is charging. The average American pays about $720 in bank fees every year. From overdraft fees to monthly maintenance fees, small amounts add up throughout the year and cost consumers a lot.
It is possible to avoid paying so many bank fees? The short answer is yes, but you need to understand why you are being charged. Every bank has different ways of structuring their fees. We'll take a closer look at bank fees in general and then dive into the specifics of monthly maintenance fees.
Banks make their money in two major ways. On the loan side, banks earn money from the interest charged on loans. Home loans, car loans, business loans - all of these accrue monthly interest paid by the borrower to the bank.
The other way banks make money is on the deposit side (also known as Retail Banking). This money comes in the form of fees on the accounts.
Some bank accounts do earn money, such as savings or money market accounts. However, this interest paid on accounts is nothing compared to what the bank is earning.
The number of accounts banks have keeps growing, and so do the fees. Banks keep pushing fees higher and higher on the Retail side, increasing the number of ways that they can charge their customers money. For some larger regional banks, the fees represent nearly 40% of the bank's income!
You're probably familiar with some of the fees. Overdraw your account, and the bank will charge you an overdraft fee. Withdraw money from an ATM, and you'll be charged ATM fees for the transaction.
Some of the more steady account fees that customers pay are in the form of monthly maintenance fees. These fees can also be the hardest to understand because they vary by account or product.
Banks charge monthly maintenance fees to essentially cover the cost to maintain your account. Sometimes banks offer perks with their accounts, like rewards programs. This monthly maintenance fee covers the cost of those programs.
For example, here are the monthly maintenance fees for some of the biggest financial institutions before waivers are applied:
These fees are usually charged straight to your account and deducted at the end of the statement period. It is possible to have these fees waived if you meet certain requirements.
Assuming that you are not in the category of qualifying people that have fees permanently waived (students and seniors, at some banks), you'll need to start by looking into how your bank applies the monthly maintenance fee to know how to avoid it.
Banks will often provide information directly on their website about waiving the monthly maintenance fees. Banks want you to use your account, so the waiver is often tied to account activity.
Let's look at some of the common requirements that banks have to avoid the service fee. It is important to note that sometimes the requirements are "you must have one of the following," and sometimes the requirements are "you must have a combination of the following." You will need to understand which your bank uses to ensure you are not charged as an account holder.
Direct deposits are funds transferred automatically to your bank. Most of the time, this is from an employer, but direct deposits can also be for government payments or other purposes.
Banks that have a direct deposit requirement may state this in different ways. It may be that your direct deposit must exceed a certain dollar amount (say, $500), or it may be that you need to have a certain number of direct deposits per month in order to waive the monthly maintenance fee.
Banks will usually have a minimum balance to open a "free checking account." Then a minimum balance is required to avoid the monthly maintenance fee. Because maintaining the account is essentially a "cost" to the bank, the bank wants to keep money in the account to justify that cost.
The minimum balance requirement to avoid the monthly maintenance fee is typically laid out in several ways. It might be that the account has a minimum of $100 every day in that statement period. It could also be done as an average over the statement period, meaning that if you dip below for a few days, you might still avoid the fee. Some banks will also consider the account balances across all your accounts with that bank such as your savings account.
If the minimum balance required is not something you can meet, that is definitely a reason to look for a different account.
Online bill payment is a service offered by some banks that allows you to pay your bills without writing checks. You can pay things like utilities or make credit card payments directly from your bank account.
Bill payment has a lot of advantages. You can send payments almost immediately, eliminating the travel time needed for a check in the mail. The payments are secure, and you can schedule them so that you do not miss a payment.
Using the bill pay service is another reason banks will sometimes waive the monthly maintenance fee.
If your checking account has a debit card, banks will grant a monthly maintenance fee waiver if you use make debit card purchases a certain number of times per month. A common number is ten times per statement cycle.
Just check to make sure that there isn't an additional monthly fee to have the debit card. Sometimes banks impose a monthly debit card fee. If that's the case and you have other ways to avoid the monthly maintenance fee, you may not want to incur a separate debit card fee.
Banks earn a small amount of money every time you use your debit card. Therefore, it is to their benefit that you use it more frequently.
Either at account opening or when you first logged in to online banking, you were probably given an option for enrolling in electronic statements. When you do this, you will no longer receive a paper statement in the mail. Instead, your statement will be available in your online account, usually as a PDF.
Banks will include electronic statements as one of the requirements for waiving the monthly maintenance fee. Sending statements in the mail costs money (stamps) and time (employees stuffing envelopes each month).
Not only are electronic statements a reason that banks may waive the monthly maintenance fee, but some banks may impose additional fees if you choose paper statements.
So opting for electronic statements is an easy one. If it's one of the requirements to waive your monthly maintenance fee, it will save you money. Plus, electronic statements are better for the planet.
Not all bank accounts are the same, and not all banks assess fees in the same ways. Once you dig into how your bank charges a monthly maintenance fee, you may find that isn't going to work for you.
For example, if your bank requires that you use Direct Deposit to waive the monthly maintenance fee and your income is irregular, that may not be practical. The same would be true for accounts that have a high minimum daily balance.
It pays to shop around. Find a bank or credit union that fits your lifestyle. While changing banks takes some work, it is worth the effort to avoid the fees. There are many no fee accounts available today commonly available with online banks.
You should also regularly check your bank statement for fees assessed. Make sure you understand the bank charged you a fee, and double-check that a mistake was not made.
Even though you may have already paid monthly maintenance fees fees this year to your bank, it is possible to get some of those fees refunded. The refund will depend on several different things, from the terms of the account to your relationship with the bank. Sometimes banks also make mistakes, in which case the fees would also be refunded.
With Harvest, you can link your bank accounts, and we'll find all your fees that can potentially be refunded. From there, you can either use Auto-Negotiate or use Assisted Negotiation to request refunds from your bank. Sign up with Harvest today to get started.
Harvest helps increase the net worth of the 99% through artificial intelligence and financial automation. To date, Harvest has refunded over $2M in bank fees and interest charges to its members with the ultimate goal of increasing the net worth of everyday Americans by $1 trillion by 2030. Our platform starts with providing immediate relief through bank fee and interest charge refunds, orients a member's financial health with our proprietary PRO Index™, and keeps track of net worth over time aided by our suite of financial tools. Check out our 8-step guide on "How to Build Wealth from Nothing" to get started on increasing your net worth.
Disclaimer: Harvest is not providing financial advice. The content presented does not reflect the view of the Issuing Banks and is presented for general education and informational purposes only. Please consult with a qualified professional for financial advice.