How to avoid bank fees that are slowly draining your savings

Are high or unreasonable fees eating away at your savings? For the average consumer, the answer could be “yes.”

In 2021, for example, the total cost of the average out-of-network ATM withdrawal was $4.59, according to Bankrate’s checking account and ATM fee study. The average bank overdraft fee hit a record of $33.58. Ouch.

From monthly maintenance fees to fees for not maintaining a minimum balance, bank overdraft fees to surcharges for out-of-network ATMs, many bank accounts include some “gotchas” you can avoid to keep costs low and savings up.

When trying to find ways to avoid bank fees, some consumers jump through hoops to make sure they’re avoiding the extra costs—keeping a large amount on deposit or setting up direct deposit, for example. But since many may not even realize they’re being charged, they could be forking over more than they think, according to a Bankrate study.

5 banking fees slowly killing your savings

Finding ways to avoid bank fees isn’t hard, but it starts with knowing what they are and how they work. Here are five fees that may be draining your bank account, plus some tips on how to avoid them:  

1. Monthly maintenance fees

Monthly maintenance fees can usually be avoided if you follow your bank’s basic rules. To bypass monthly maintenance fees, consumers usually need to keep a specific amount of money on deposit, use their debit card regularly, or set up direct deposit.

Make sure to check with your bank to learn its specific rules for avoiding monthly maintenance fees. If you can only meet some of your bank’s requirements, you could consider calling or visiting your bank to see if it will waive the added fees.

“I think if you have your funds direct deposited, you maintain balances at a bank, and you swipe an ATM debit card with that bank, then you should feel comfortable knowing that you provide value to that bank,” says Shannon McLay, financial advisor and founder of a financial advisory firm. Because of that, you shouldn’t have to pay additional fees, she says.

You can also consider banks without monthly fees to avoid maintenance-related charges altogether.

2. Minimum balance fees

Some banks offer no-fee or discounted banking services if you maintain a “minimum balance” on deposit. This may work fine if you have plenty of cash to park, but it can be a hassle if you tend to keep your checking account balance low or need to dip into your savings from time to time.

If you need to access your money regularly and don’t want to maintain a minimum balance with one bank, consider an online checking account or online savings account that doesn’t have this requirement. It’s a pretty easy way to avoid bank fees. Just make sure you’re comparing all costs associated with your new account so you’re making an apples-to-apples comparison, and add some banks without monthly fees to your list for an even better comparison.

3. ATM fees

ATM fees can also drain your savings if you withdraw cash frequently and don’t have a broad ATM network to rely on. If you hit enough out-of-network ATMs, you can see how quickly these fees can add up.

If you’re thinking about how to avoid bank fees, you need to figure out where to find no-fee ATMs. This may require a couple of steps. First, you could shop around for a different bank with a broader ATM network. Figure out which brand of ATMs you use most often, then determine which bank might offer the most coverage. Don’t forget to compare other types of fees (minimum balance fees, maintenance fees, etc.) so you get a sense of the big picture. You want to avoid a scenario where you end up saving on ATM fees, but pick up additional bank charges elsewhere.

You can also try to negotiate with your current bank, says Bobbi Rebell, award-winning journalist and author.

“If you explain that you’d like to stay with the bank but the ATMs are just not convenient, there is a very high probability they will try to work something out so you are not paying ATM fees,” she says. “It is always easier for the banks to retain a customer than to acquire a new one.”

4. Bank overdraft fees

“Overdraft fees are a killer,” Rebell says.

With a debit card, you might assume you’ll get turned down for a purchase if you don’t have the cash, she says. “But often they will pull money from your savings account instead—for a fee. So, you may not even realize you’re in overdraft mode at the time of the transaction.”

In some cases, you may incur bank overdraft fees that are larger than the purchases you make. For example, even spending $3 more than you have in your checking account could mean you’re charged a $35 overdraft fee.

If you aren’t aware you’ve overspent, you could even endure multiple overdraft fees for subsequent purchases at $35 a pop. And that’s true no matter how inexpensive your purchases are.

Fortunately, federal regulations in 2010 made it so consumers had to “opt in” for overdraft protection. If you don’t opt in, your bank is required to deny purchases and ATM withdrawals once an account is depleted. It is important to note that you may still be charged an Insufficient Funds Fee if you don’t have enough money in your account to cover a charge, even if you haven’t opted in to overdraft protection.

While this rule has helped consumers looking for ways to avoid bank fees, you still need to be careful of additional charges if you opt in to overdraft protection. “Track the money you deposit into and withdraw from your account. You can do this on a paper check register or electronically,” notes the Federal Deposit Insurance Corporation (FDIC). “Remember to track ATM withdrawals, purchases you make with your debit card, bills that get debited electronically from your account, and checks.”

5. Paper statement fees

How to avoid bank fees the easy way? Ditch the paper statements and say goodbye to paper statement fees. Set up a free email account if you don’t have one, then sign up for paperless statements with your bank. From that point forward, you’ll receive an electronic statement, skip the fee, and do a good deed for the environment.

If you’ve been charged a fee for paper statements in the past, this is another instance where you can consider calling your bank to ask for a refund. While your bank may not be keen to granting your request, you won’t know unless you ask.

How to avoid bank fees in the long term

Bank fees may seem insignificant, but it’s important to note how they work against your savings goals. The money you fork over in fees is money you’ll never get back.

One of the biggest problems consumers face is not knowing which fees they’re paying and when, McLay says. That’s why it’s always helpful to monitor your account regularly for bank fees and potential fraudulent charges.

And if you see a bank fee you don’t like or understand, think about calling and asking for a refund.

Rebell says that building a personal relationship with your bank can’t hurt. “I am a big believer in the human side of money and business,” Rebell says. “If you aren’t happy with anyone you do business with, including a bank, get in touch and see if you can work something out.”

If your requests are reasonable, chances are good your bank will try to accommodate you, she says.

“But you have to make the effort to have that conversation and ask for what you want.”

Lastly, it makes sense to shop around for banks without monthly fees. That way, you won’t have to jump through hoops to keep your savings from being drained by fee after fee.

Now that you know how to avoid bank fees, learn how to get the most from your checking account.

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