Managing a checking account can be a great way to keep your finances organized and ensure you have easy access to your money. However, if you're not careful, you could end up paying a lot of money in fees that can quickly add up over time. In this blog post, we'll discuss some tips on how to avoid common checking account fees such as overdraft fees, ATM fees, and more.
Why do banks charge fees for checking accounts?
Many banks charge fees for checking accounts to cover the costs of maintaining the accounts, such as processing transactions, providing customer support, and ensuring the security of your money. These fees can also help banks make a profit and offset their costs.
When choosing a checking account, be sure to view the options that work best for you. Some financial institutions, like credit unions, do not have any hidden fees or charge you for having an account but rather pay you dividends and interest on your money.
What are the types of checking account fees?
The first step to avoiding fees is to know what they are. There are several types of checking account fees, including:
1. Monthly Service Fees
Some banks or credit unions charge a fee to maintain your checking account. This fee can vary depending on the bank and the type of account you have. Some financial institutions may offer fee waivers if you meet certain criteria, such as maintaining a minimum balance or setting up direct deposit. It's important to review the terms and conditions of your checking account carefully to understand what fees may be charged and what steps you can take to avoid them.
2. Overdraft and Non-Sufficient Funds (NSF) Fees
Overdraft fees and NSF are charged when you spend more money than you have in your account. This fee can be charged for each transaction or only after the first one that overdraws your account.
To avoid overdraft fees, you can set up overdraft protection. This is an optional service that links your checking account to another account, such as a savings account, credit card, or line of credit. If you overdraw your checking account, the linked account is used to cover the negative balance instead of triggering an overdraft fee. You can also set up a low-balance alert to notify you when your account is low. Keep in mind that every financial institution is different and it's important to read the terms and conditions of the overdraft protection program to understand how it works and any associated fees.
3. ATM fees
Some banks or credit unions charge fees when you use an ATM that is not part of their network. With many credit unions, members can access shared branching. Shared branching is where despite your location, you have access nationwide to shared branch and ATM network.
While some banks or credit unions may charge ATM fees for out-of-network transactions, others may reimburse these fees up to a certain amount per month or per statement cycle. Additionally, some banks or credit unions may offer accounts with benefits such as unlimited ATM fee reimbursements or access to a larger ATM network without fees. It's always a good idea to check with your bank or credit union to understand their ATM fee policy and any potential benefits available to you.
The right credit union for you will have multiple branches and a wide network of ATMs, so you won’t get stuck paying ATM fees. Leaders Credit Union members get access to more than 85,000 fee-free ATMs and more than 5,600 shared branches across the country.4. Account Closure Fees
Some banks or credit unions may charge a fee if you close your checking account within a certain time frame after opening it.
Account closure fees are typically charged to discourage customers from opening an account with a bank or credit union just to take advantage of a promotion or sign-up bonus, and then quickly closing the account. Before opening a new account, it's always a good idea to ask the bank or credit union representative about any fees or charges that may apply to your account.
5. Returned Deposit Item Fees
If you deposit a check or other item into your account that is later returned due to insufficient funds or other issues, you may be charged a fee.
Returned deposit item fees are also known as bounced check fees. These fees can be quite high, sometimes even exceeding the amount of the bounced check itself. It is important to keep track of your account balance and avoid depositing checks or making purchases that will overdraw your account. Many banks and credit unions offer overdraft protection services that can help prevent bounced check fees, but these services may also come with fees of their own.
6. Stop Payment Fees
If you need to stop a check or other payment from being processed, you may be charged a stop payment fee.
Stop payment fees are charges that you may face when you request to stop payment on a check or another type of payment. These fees can vary between banks and credit unions and may be a one-time fee or charged per transaction. Some financial institutions may also require you to provide written notice of the stop payment request, which could delay the process and result in additional fees. It is important to carefully review the terms and conditions of your account to understand the specific stop payment policies and fees of your financial institution.
7. Wire Transfer Fees
If you need to send money to another bank or credit union, you may be charged a fee for the wire transfer.
Wire transfer fees are usually higher compared to other fees associated with other accounts. The amount of the fee can vary depending on the amount of money being sent and the destination of the transfer. Some banks and credit unions offer different types of wire transfers, such as domestic or international wire transfers, and the fees for each type can be different. It's important to check with your bank or credit union to understand the specific wire transfer fees and options available to you. Additionally, some financial institutions offer alternative methods for transferring money.
8.Dormant Account Fees
If you have an account that has not been active for a certain period of time, there might be a fee to close that account.
Dormant account fees are also known as inactivity fees. The specific timeframe and amount of fees can vary depending on the bank or credit union. It's important to keep track of your accounts and make sure they remain active to avoid these fees.
What is the most common checking account fee?
The most common checking account fee is the monthly maintenance fee. This fee can range from a few dollars to more than $10 per month, depending on the bank and the type of account you have. To avoid this fee, some banks require you to maintain a minimum balance or make a certain number of transactions each month.
What financial institutions have free checking with no minimum balance?
Several banks and credit unions offer free checking accounts with no minimum balance requirements.
When choosing a checking account, look for one that offers free checking with no monthly maintenance fees or minimum balance requirements. Some credit unions may also offer overdraft protection programs that can help you avoid overdraft fees. You should also look for a credit union or bank that offers a large network of fee-free ATMs or reimburse ATM fees charged by other banks or credit unions.
By choosing a credit union with low or no checking account fees, you can avoid common fees and save money in the long run. Plus, you'll be supporting a not-for-profit financial institution that is focused on serving its members and the community.
It's important to note that not all credit unions or banks charge fees, and the fees that are charged may vary depending on the financial institution and the type of account you have. However, it's always a good idea to compare the features and fees of different banks and credit unions before opening a checking account to make sure you find the one that best fits your needs.
Should I get a checking account with no fees?
If you're looking to save money on checking account fees, getting a checking account with no fees is a great option. Many banks or credit unions offer free checking accounts with no minimum balance or monthly maintenance fees. Additionally, make sure the bank you choose offers the features and services you need, such as online banking, mobile banking, and free ATM access. By doing your research and choosing the right checking account, you can avoid common fees and save money in the long run.
Managing a checking account can be a convenient and effective way to keep your finances organized and accessible. However, it's important to be aware of the different types of checking account fees that can be charged by banks or credit unions, including monthly maintenance fees, overdraft fees, ATM fees, and foreign transaction fees.
To avoid these fees, it's crucial to compare the features and fees of different banks and credit unions then, choose a checking account that best fits your needs, whether it be one with no fees or one that requires a minimum balance. By taking these steps, you can save money and effectively manage your checking account.
Switch Your Account to Leaders Credit Union Today
If you’re not happy with your current bank, it may be time to find a new one—particularly if you’re paying fees you don’t need to pay, or you’re dissatisfied with customer service. Check out our Switch Guide when you feel like it's time to make a change.
Are you in search of a new financial institution with competitive rates and excellent customer service? We hope you’ll consider Leaders Credit Union! We encourage you to read more about our membership benefits and open an account today.
