Common Bank Fees And How to Avoid Them: Best Guide

When opening a bank account for the first time, many people feel excited about watching their savings grow, even if the initial balance is small. In the past, earning a little interest each month felt rewarding. However, modern banking often works differently. Many accounts now come with minimum balance requirements, and failing to meet them can result in monthly maintenance charges that slowly reduce your balance.

These minimum balance fees are just one example of the many charges banks may apply. From ATM withdrawal fees to overdraft charges and service fees, the list can feel endless. At times, it may seem like keeping money in a traditional account offers fewer benefits than expected.

Fortunately, avoiding unnecessary fees is possible. By choosing the right type of account, reading the bank’s fee schedule carefully, and using banking services wisely, customers can significantly reduce or even eliminate many common charges. Smart financial management helps ensure that your savings remain intact and continue to grow over time.

Common Bank Fees and How to Avoid Them

Banks often charge a variety of fees for account maintenance, transactions, and additional services. These charges can add up quickly if you’re not paying attention. Below is an overview of the most frequent bank fees customers encounter and practical ways to avoid them.

1. Insufficient Funds Fee (Overdraft Fee)

An insufficient funds fee—commonly called an overdraft fee—occurs when a transaction exceeds the available balance in a checking account. Many people activate overdraft protection to prevent card declines, allowing transactions to go through even when the account balance is too low. While this prevents the inconvenience of a rejected payment, it often results in a costly fee charged by the bank.

For example, if an account has $30 but a $32 purchase is made using a debit card, overdraft protection will allow the transaction to process. In return, the bank may charge an overdraft fee of around $35. Additional small purchases made afterward can trigger more fees, quickly adding up. Even a few minor transactions can push the total overdraft charges over $100 in a single day, despite only exceeding the account balance by a few dollars. Many banks limit the number of overdraft fees per day, but the cumulative cost can still be significant.

How Much It Can Cost

Overdraft or NSF (non-sufficient funds) fees are among the highest routine charges in the banking system. Most financial institutions charge between $30 and $36 per overdraft. If someone incurs just one fee each month, the annual cost could range from $360 to more than $430.

How to Avoid Insufficient Funds Fees

Avoiding these charges is possible with the right strategies:

• Avoid Opting In for Overdraft Coverage: Banks are not allowed to automatically enroll customers in overdraft protection for debit transactions. Declining this service prevents the bank from charging overdraft fees. If you previously opted in, you can request to opt out at any time.
• Monitor Your Balance Regularly: Because debit card transactions do not always post instantly, the real-time account balance may briefly fall below the required amount, triggering a fee. Keeping a small buffer amount in your checking account can help prevent accidental overdrafts.
• Enable Low-Balance Alerts: Most banking mobile apps provide alerts when your balance drops below a set threshold or when a transaction could cause an overdraft. These notifications give you time to cancel a purchase or transfer funds.
• Link Your Checking Account to a Savings Account: Many banks offer automatic transfers from a savings or money market account if your checking account balance falls short. Some institutions may charge a small transfer fee, but it is typically far lower than an overdraft fee.
• Connect a Credit Card or Line of Credit: If a savings account isn’t available, linking a credit card for overdraft protection is another option. Any overdraft amount is charged to the card, often with a much smaller transfer fee.
• Consider Switching to a Low-Fee or No-Overdraft Bank: Some modern banks and credit unions have eliminated overdraft fees altogether. Institutions known for low or zero NSF fees include Alliant Credit Union, Ally Bank, Axos Bank, Chime, nkbc, and Wealthfront.

2. Insufficient Funds Fee

An insufficient funds fee, often referred to as an overdraft fee, is charged when a transaction goes through even though the account balance is too low to cover it. Many account holders turn on overdraft protection to avoid card declines, allowing purchases to be approved despite insufficient funds. While convenient in the moment, this feature can become expensive.

For instance, if an account has $30 and a debit card purchase of $32 is made, overdraft protection would allow the transaction to process. However, the bank may charge an overdraft fee of around $35. A few more small purchases made afterward—such as $5 for a prescription or $2 for a coffee—can each trigger additional overdraft fees. Even though the account may be overdrawn by less than $10 total, the accumulated fees can exceed $100 in a single day. Many banks cap the number of daily overdraft fees, but the cost remains significant.

How Much These Fees Cost

Overdraft and NSF (non-sufficient funds) fees are some of the highest service charges imposed by banks. Most financialinstitutions charge between $30 and $36 per occurrence. If a customer triggers only one overdraft fee each month, this can amount to $360 to over $430 per year—money that could otherwise stay in savings.

How to Avoid Insufficient Funds Fees

Fortunately, there are several practical strategies to prevent these charges:

• Opt Out of Overdraft Coverage: Banks cannot enroll customers in debit overdraft protection without permission. Declining this feature ensures that debit transactions are simply declined rather than approved with a fee. If you previously opted in, you can request to remove it.
• Keep Track of Your Balance: Not all transactions appear instantly in your account. Pending payments can temporarily reduce your available balance and cause unexpected overdrafts. Maintaining a small financial cushion helps avoid accidental shortfalls.
• Use Low-Balance Alerts: Many banking apps offer alerts when your account balance drops below a chosen limit or when a transaction might lead to an overdraft. These alerts provide time to transfer money or stop the transaction.
• Link Your Checking and Savings Accounts: Some banks allow automatic transfers from a savings account to cover overdrafts. Although there might be a small transfer fee, it is generally much cheaper than an overdraft charge.
• Link a Credit Card or Line of Credit: If a savings account is not available, linking a credit card can serve as an overdraft backup. The overdrawn amount is charged to the card, often with a lower transfer fee than a typical NSF charge.
• Choose a Bank with Lower or No Overdraft Fees: Several banks and credit unions have eliminated overdraft fees or charge significantly less. Examples include Alliant Credit Union, Ally Bank, Axos Bank, Chime, nkbc, and Wealthfront. Switching to such institutions can help reduce unnecessary charges.

3. Minimum Balance Fee

A minimum balance fee is charged when an account holder fails to maintain the required amount of money in their bank account. Instead of a standard monthly service fee, many banks use minimum balance rules to determine whether an account remains free or becomes chargeable.

The required minimum balance varies widely depending on the institution and the type of account. Some accounts require as little as $100, while others may require maintaining several thousand dollars. To determine whether the requirement has been met, banks typically calculate the average monthly balance—adding up each day’s closing balance and dividing it by the number of days in the month. If this average falls below the set minimum, the bank applies the fee.

How Much This Fee Costs

Minimum balance fees function similarly to monthly maintenance charges. They typically range from a few dollars up to $25 per month, depending on the bank and account type.

How to Avoid Minimum Balance Fees

Avoiding minimum balance fees is possible with the right approach. Some helpful options include:

• Maintain the Required Balance: Keeping your account balance above the bank’s minimum threshold is the simplest way to avoid the fee. If this isn’t feasible, consider other account options.
• Open a Student Account: Many banks offer free checking accounts for full-time students. Popular institutions like Chase, PNC, and Wells Fargo provide student-friendly accounts with no minimum balance requirements.
• Switch to a Bank with Free Checking: A number of banks and credit unions offer checking accounts with no minimum balance conditions. Online banks such as Ally, Axos, Chime, and Wealthfront, as well as credit unions like Alliant, are known for providing fee-free accounts.
• Switch to a Different Account Type: If you currently hold an interest-bearing checking account, consider switching to a standard non-interest checking account. With today’s modest interest rates, the small amount of interest earned is usually not worth the additional fees.

4. Out-of-Network ATM Fee

Out-of-network ATM fees are charged when you withdraw cash from an ATM that does not belong to your bank’s network. For example, if you’re away from home and need cash, you might use the nearest available ATM even if it belongs to another bank. In such cases, the ATM owner may charge a service fee—often around $2.50. In addition, your own bank may add a separate out-of-network usage fee, such as $1.50. This means a simple $50 withdrawal could end up costing $4 or more in fees.

How Much These Fees Cost

The price for using an out-of-network ATM varies depending on the bank and the institution that owns the machine:

• Your bank’s fee: typically $1 to $3
• ATM owner’s fee: usually $1 to $4
  Traditional banks generally have higher fees, while online banks and credit unions tend to offer lower or more flexible fee structures.

How to Avoid Out-of-Network ATM Fees

Out-of-network ATM fees are among the easiest banking charges to avoid. Here are several effective strategies:

• Use Your Bank’s ATMs Only: Withdrawing cash from your bank’s own ATMs ensures you are not charged a fee. Use your bank’s website or mobile app to locate nearby in-network ATMs, especially when traveling.
• Use Cash-Back Options at Stores: If you can’t find an in-network ATM, many stores allow debit card purchases with a cash-back option—usually with no extra fee. This can be a convenient alternative.
• Switch to a Bank with a Larger ATM Network: If you frequently pay ATM fees, consider moving to a bank with more ATM locations in your area or a bank that partners with large national ATM networks.
• Choose an Online Bank That Reimburses ATM Fees: Many online banks don’t operate their own ATM networks and instead refund ATM fees, making them a cost-effective choice for frequent travelers or those who often withdraw cash away from home.
• Reduce the Need for Cash Altogether: Using digital payments—such as debit cards, credit cards, PayPal, Venmo, or other payment apps—can drastically reduce trips to the ATM, eliminating the chance of incurring ATM fees altogether.

5. Inactivity Fee

An inactivity fee—also known as a dormancy fee—is charged when an account remains unused for an extended period. Banks implement this fee because dormant accounts require extra administrative work and are subject to strict regulatory requirements, making them costly to manage.

Typically, an account must remain untouched for six months to a year before the bank begins charging inactivity fees. Some banks notify customers ahead of time, but others may start deducting the fee automatically. If the account continues to remain dormant and the bank cannot contact the account holder, it may eventually classify the account as abandoned. At that point, the remaining funds are transferred to the state treasury. Before this transfer, the bankmay also apply a one-time escheatment fee, adding to the overall cost.

How Much This Fee Costs

Not all banks impose inactivity fees, but those that do generally charge between $5 and $20 per month. Escheatment fees, when applied, typically cost around $50.

How to Avoid Inactivity Fees

Inactivity fees are most often charged on savings accounts or older accounts that are rarely used. Here’s how to avoid them:

• Close Unused Accounts: If you haven’t used an account in several months and no longer need it, closing it completely is the simplest way to avoid future fees.
• Keep the Account Active: Make at least one small transaction every month. This could be:

1. A deposit
2. A withdrawal
3. A debit card purchase
4. A check transaction
5. Or in some cases, simply logging in to check your balance
   Even minor activity can reset the inactivity timer.

• Set Up a Recurring Transfer: If you’re concerned about forgetting to manually use the account, schedule an automatic monthly transfer. Just ensure the account maintains a sufficient balance to avoid overdraft fees.
• Monitor Bank Notifications: Regularly check your email, bank statements, and secure messages. Banks often issue warnings before an account becomes dormant, giving you time to take action.

6. Excess Activity Fee

Savings accounts are designed primarily for storing money, not frequent transactions. As a result, many banks impose an excess activity fee when customers exceed a set number of withdrawals or transfers within a month. This charge often surprises users who expect savings accounts to function like checking accounts.

Historically, this fee was tied to Federal Regulation D, which limited savings account holders to no more than six withdrawals or transfers per month. Although the Federal Reserve suspended this requirement during the COVID-19 pandemic—allowing unlimited transactions—banks still retain the right to enforce transaction limits and charge fees if those limits are exceeded.

If a customer continues making too many transfers, banks may take additional steps such as issuing warnings, converting the savings account into a checking account, or in rare cases, closing it entirely. While Regulation D no longer mandates fees, many banks continue charging them as part of their internal policies.

How Much This Fee Costs

Excess activity fees typically range from $3 to $25, depending on the institution. Some banks increase the fee based on how many transactions exceed the limit.

How to Avoid Excess Activity Fees

Avoiding this fee is fairly simple with a bit of planning:

• Understand Your Bank’s Transaction Policy: Since transaction rules vary, check whether your bank still enforces withdrawal limits or charges fees for exceeding them. Some banks have permanently removed excess activity fees.
• Use Your Checking Account for Frequent Transactions: This fee only applies to savings accounts. Regular payments, transfers, or recurring transactions should always be routed through your checking account.
• Consolidate Your Transfers: Try to plan your monthly expenses ahead of time. Instead of multiple small transfers from savings to checking, move the total needed amount once per month.
• Maintain a Cushion in Your Checking Account: Keeping extra funds in your checking account helps you cover unexpected expenses without dipping into your savings.
• Make Transfers at the Bank or ATM: Regulation D restrictions never applied to in-person or ATM transactions. Even now, some banks still allow unlimited teller or ATM withdrawals. If you’re at risk of exceeding the monthly limit, handle the transfer directly at the branch or ATM to avoid the fee.

7. Paper Statement Fee

Many banks now encourage customers to receive account statements digitally. Electronic statements are faster, more convenient to access, and reduce the environmental impact of printing and mailing paper documents. They also help banks cut down on administrative and mailing costs.

Despite the push toward digital banking, some customers still prefer receiving printed statements each month. However, this traditional option usually comes with an added charge, as banks increasingly treat paper statements as a premium service.

How Much It Costs

Paper statement fees are usually small but recurring. Most banks charge between $2 and $3 per monthly statement, while a few may charge up to $5. Though the fee may seem minor, it can accumulate over the year—paying $3 per month results in $36 annually.

How to Avoid Paper Statement Fees

Avoiding this fee is simple:
Opt for electronic statements. Once you switch to e-statements, you’ll receive your monthly account summary by email or through your bank’s mobile app. If you ever need a physical copy, you can download and print it at home without paying the monthly fee.

8. Lost Card Fees

Losing your wallet or having it stolen is stressful. Not only do you lose any cash you were carrying, but you also have to cancel and replace all your debit and credit cards. To make things worse, some banks charge a fee for replacing a lost debit card.

How Much It Costs You

Most banks don’t charge for a standard replacement card, but a few do, typically between $5 and $10. However, if you need the card urgently, banks usually charge extra for rush delivery, which can cost anywhere from $5 to $30 depending on the institution and location.

How to Avoid Lost Card Fees

Here are some effective ways to avoid paying unnecessary replacement or rush fees:

• Watch Your Wallet: Preventing loss is the easiest way to avoid fees. Keep your wallet or purse secure and close to your body—especially in crowded places. Use a front pocket, or keep your bag zipped and held close.
• Keep a Backup Card at Home: Store one debit or credit card in a safe place at home. If your wallet goes missing, this backup card lets you continue making payments until your replacement arrives—eliminating the need to pay for expedited shipping.
• Pick Up Your Card at a Branch: Many banks allow you to pick up a replacement card directly from the branch. Some even print your new debit card instantly, saving you both time and delivery fees.
• Request a Temporary Card: If instant issuance isn’t available, banks often offer temporary cards for free. This gives you access to your funds while waiting for the official replacement.
• Use Cash Temporarily: If none of the above options work, withdrawing cash from your bank branch can help you manage your expenses until your replacement card arrives—avoiding rush fees altogether.

9. Wire Transfer Fees

A wire transfer is one of the quickest and most reliable ways to send money from your

nk account to someone else’s—whether within the country or internationally. It’s especially useful when you need to send funds urgently. However, this speed and convenience usually come with a fee, and you may be charged whether you’re sending or receiving the money.

How Much It Costs You

Wire transfer fees vary based on the bank and whether the transfer is domestic or international:

1. Domestic wire transfers: Usually cost between $10 and $35 when sending money within the U.S.
2. International wire transfers: More expensive and typically range from $35 to $50.
3. Receiving wire transfers: Some banks do not charge for incoming wires, but others may charge around $15.
   These costs can add up, especially if you send money frequently.

How to Avoid Wire Transfer Fees

While wire transfers are fast, they’re not the only way to send money. Here are several alternatives that can help you avoid paying high bank fees:

• Use Online Banking: Most banks offer free online bill payments. If you’re paying a business, this is usually the simplest and cheapest option. Some banks also allow transfers between individuals if you know the recipient’s banking details.
• Use a Payment App: Popular apps like Zelle and Venmo allow you to send money instantly for free to other users. Other platforms like PayPal and PopMoney let you send money to anyone using just their email or phone number—even if they don’t have an account on the platform.
• Use an International Transfer Service: For sending money abroad, consider low-cost services such as Wise (formerly TransferWise) or OFX. Their fees are usually far lower than traditional bank wire fees, and exchange rates tend to be more competitive.
• Write a Check: Traditional paper checks are still an option and don’t cost anything extra to send. This method is slow, though, so it’s best when speed is not a priority.
• Pay in Person: If the recipient uses a local bank branch you can visit, you may be able to deposit cash or a check directly into their account. You’ll need their account details, but there is usually no fee for making a deposit.
• Switch Banks: If you frequently send wire transfers, consider switching to a bank that offers free outgoing or incoming wires. For example, some financial institutions like Fidelity offer free wire transfers, while others waive the fee for premium accounts such as HSBC Premier.

10. Foreign Transaction Fees

Traveling abroad used to require a lot of preparation—exchanging currency, carrying travelers’ checks, and managing cash carefully. Modern banking has changed that. Thanks to debit cards and international ATMs, accessing money overseas is easier than ever. You can withdraw local currency directly from your bank account or make purchases using your debit card just like you do at home.

However, this convenience comes with a price: foreign transaction fees. Each time you make a purchase or withdraw cash overseas, your bank charges a fee to convert your U.S. dollars into local currency.

How Much It Costs You

Foreign transaction fees typically range between 1% and 3% of the total amount you spend or withdraw. In addition, many banks apply their standard out-of-network ATM fee on international ATM withdrawals. When combined, this can make accessing money abroad surprisingly expensive.

How to Avoid Foreign Transaction Fees

Minimizing or avoiding these fees is possible with the right strategy. Here’s how you can keep more of your money while traveling:

• Use a Credit Card With No Foreign Transaction Fees: Avoid using your debit card for purchases overseas. Instead, choose a credit card that charges no foreign transaction fees. Many travel credit cards offer this benefit, and all Discover and Capital One cards waive foreign transaction fees by default.
• Withdraw Larger Sums at Once: Each ATM withdrawal abroad may come with multiple fees. To reduce the total number of charges, withdraw a larger amount of cash at once and use it gradually.
  Tip: Only do this in safe areas, and keep your money secure to reduce the risk of theft.
• Look for Partner ATMs: Some banks have global ATM partnerships that allow you to withdraw cash overseas without paying extra fees. For example, Bank of America participates in the Global ATM Alliance, which offers fee-free withdrawals at partner ATMs in many countries.
• Switch to a Travel-Friendly Account: If you travel internationally frequently, consider switching to a bank that waives all foreign transaction and ATM fees. Options include Charles Schwab High Yield Investor Checking (refunds ATM fees globally), Capital One Bank (online accounts with no foreign transaction fees). These options can save you significant money over time, especially if you travel abroad regularly.

11. Returned Deposit Fee

Bank fees aren’t always caused by your own actions. Sometimes, you can be penalized because of someone else’s mistake. For example, imagine your roommate writes you a check to cover their share of the utility bill — but there isn’t enough money in their account. When you deposit the check, it bounces.

Your roommate gets hit with a Non-Sufficient Funds (NSF) fee for writing a bad check, but you also get charged a returned deposit fee, also known as a bounced-check fee. Even though you weren’t at fault, the bank still charges this fee for processing a check that cannot be honored.

How Much It Costs You

If you deposit a check from a U.S. bank that bounces, the returned deposit fee typically ranges from $10 to $20.
For checks drawn from foreign banks, the fee is higher and may go up to $40 due to international processing complexities.

How to Avoid Returned Deposit Fees

Avoiding a fee caused by someone else’s error isn’t always simple, but there are several smart steps you can take to protect yourself.

• Ask Before You Deposit: Before depositing a personal check, politely ask the person who wrote it whether they’re sure the funds are available. A gentle reminder helps avoid accidental overdrafts on their end and fees on yours.
• Verify With the Bank: If talking to the issuer isn’t possible, consider taking the check to the bank it was issued from. The bank can confirm if there are enough funds to cover the check.
• Watch Out for Fake or Altered Checks: Be extra careful when receiving checks from people you don’t know well. Look for:

1. A legitimate bank name, address, and phone number
2. Clear security features like watermarks or a security box
3. Proper perforated edges
4. No smudges or altered printing

Fake checks are common in scams, so it’s better to be cautious.

• Check the Federal Reserve Number
  At the top of a check is a Federal Reserve number. The last 3–4 digits should match the first 3–4 digits of the routing number at the bottom. Mismatches are a red flag.
• Wait for the Check to Clear: Just because your bank shows the check as “pending” doesn’t mean the money is fully cleared. It can take several days—or even weeks—for a bounced check to be identified.
  To avoid both returned deposit fees and accidental overdraft fees, wait until the funds are reflected in your actual balance, not just your available balance, before spending them.
• Ask Your Bank to Waive the Fee: If you’re a long-time customer with a clean record, your bank may agree to waive the returned deposit fee as a courtesy. It never hurts to ask.

12. Early Account Closing Fee

Closing a bank account is usually free, but some banks charge a fee if the account has been open for less than three to six months. Banks impose this fee to discourage frequent account openings and closures, which create extra administrative work.

How Much It Costs You

Not all banks charge for early account closure, but those that do typically set the fee at around $25, with some charging as much as $50.

How to Avoid Early Account Closing Fees

There are a few simple strategies to avoid this charge:

• Avoid Opening Accounts You Don’t Need: Many people open new accounts to take advantage of sign-up bonuses. If you close the account immediately, the early closure fee can easily offset the bonus. Only open accounts you plan to use long-term.
• Check Your Bank’s Policy: Before closing any account, review the bank’s early closure policy. If the account has been open for just under the required period, consider waiting a few more weeks or months to avoid the fee.

Conclusion

Bank fees can slowly erode your savings if you’re not paying attention. From overdraft charges and minimum balance fees to ATM surcharges and foreign transaction costs, these fees often slip into your account unnoticed. The good news is that most of them can be avoided with a bit of awareness and planning.

Understanding how each fee works is the first step. The next step is building smartbanking habits—keeping track of your balance, using in-network ATMs, staying within transaction limits, choosing digital statements, and monitoring your accounts regularly. In many cases, simply choosing the right bank or switching to a more customer-friendly account can save you a significant amount of money throughout the year.

Managing your money shouldn’t feel like a battle against hidden charges. By staying informed and proactive, you can keep your banking experience simple, transparent, and cost-effective—allowing your money to grow instead of being drained by unnecessary fees.