How to Avoid Bank Fees: Different Types of Bank Fees and How to Avoid Them?

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Bank fees are something that is rising with time. In order to increase their profits, banks are hiking their fee rate every year. This is because bank fees are one of the chief revenue sources for many banks. Since many years, banks have been raising their fees.

There are plenty of fees charged by banks. Some of these are very much obvious, like overdraft fees, and some of them are concealed. No matter what type of bank fees it is, you should always heed the terms and conditions associated with your bank account as well as check your bank statements.

And, if you want to know anything about the fees charged by your bank or have some confusion regarding the charged bank fees on your account, you must freely contact your bank’s customer support service, such as a cashier or any other bank representative.

Nevertheless, knowledge is good and thus you should stay informed. We have listed some of the most vexing bank fees, along with the ways on how to avoid these bank fees. Make sure that you shun these fees to your best.

  1. Service fee

    Image courtesy:myeasylink.com
    Image courtesy:myeasylink.com

Every bank charges a service fee either every month or every year. These fees are the charges for having a bank account at the said bank. You need to pay a service fee to the bank, no matter whether you have a savings account or a checking account. The average service fee right now is around $10 per month.

There are also banks, which charge a service fee annually instead of monthly, in order to make it less palpable for their customers. This type of fee is automatically pulled out of your bank account, owing to which it can also set off an overdraft.

You can avoid bank service fees by opening an account at a bank that offers free accounts. You can also check if the services fees can be waived off after meeting some conditions, such as completing a specific number of transactions or keeping a minimum balance in your account.

  1. Overdraft fee

    Image courtesy:Consumer Affairs
    Image courtesy:Consumer Affairs

Overdraft fee is a very common type of bank fee. It is charged when the bank clears a transaction, irrespective of the balance in your account. According to reports, the average amount of overdraft fee is around $35.

You may decide to avoid the overdraft fee by declining overdraft services from your bank. However, if you do so, your debit card transaction will also be rejected. One of the other options that you have when trying to know how to avoid bank fees is to link your checking account to a line of credit or a savings account.

In such a case, the money is automatically shifted into your checking account in order to cover up the overdraft. Although, there is a fee for such transactions too, it is quite smaller than overdraft fees. Generally, the fee on such transactions is $5 and the interest rates on line of credit. But, the best way to avoid an overdraft fee is to track your expenses and ensure that there is sufficient amount of money in your bank account.

  1. Nonsufficient funds fee

A bounced check is a consequence of a nonsufficient funds fee. You may have noticed this before that when your check clears, there is sufficient amount of money in your bank account for other transactions to run easily. But after your check clears, that money is no more there.

In such a case, your check bounces without any payment and you are charged with overdraft funds fee of around $35 or even more. At this time you think to yourself, how to avoid bank fees. In most of the cases, the nonsufficient funds fee relies on the order of how your transactions are processed.

Image courtesy:Little Square
Image courtesy:Little Square

A few banks do not process all the transactions until the day is over and some of them may order the transactions by type, like grouping checks and debit transactions. For instance, if you have $100 in your bank account and you have written a check for $60, along with three debit transactions for $30 each, the order of the transactions is important.

However, if the bank goes for debit transactions first, which in this case equals $90, you will have to pay one fee on your check clearance. But, if the bank clears the check first, then you will have to pay three nonsufficient fund fees. You can avoid this type of fees by tracking your expenses, so that you do not end up exceeding your funds at hand.

So, these are some types of bank fees that you can avoid, if you pay attention to your spending and act responsibly. How to avoid bank fees is not as difficult as it seems. You just have to stay informed about the different kinds of fees that banks charge and know how you can avoid them.

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