Understanding Checking Account Fees Explained

Checking Account Fees

Did you know that the average overdraft fee is $26.61? And the average NSF (non-sufficient funds) fee is $19.94? These fees can have a significant impact on your finances, making it crucial to understand checking account fees and how to avoid them to effectively manage your money.

According to Bankrate’s 2023 checking and ATM fee study, around 45 percent of checking accounts surveyed are listed as free checking accounts, meaning you can find an account without any fees. In this article, I will explore the various checking account fees, including overdraft fees, ATM fees, and monthly service fees, and provide valuable tips on how to avoid them. By managing your checking account fees, you can better control your finances and avoid unnecessary charges.

Overdraft and NSF Fees

Overdraft fees and NSF fees are some of the most expensive fees associated with checking accounts. The average overdraft fee is $26.61, and the average NSF fee is $19.94. These fees can be imposed when the bank covers transactions that overdraw your account or denies payments that would result in a negative balance.

To avoid these fees, there are several steps you can take:

  • Set up low-balance alerts: Many banks offer the option to receive notifications when your account balance falls below a certain threshold. This can help you stay informed and take action to avoid overdrawing your account.
  • Check your balance frequently: Make it a habit to check your account balance regularly, especially before making a payment or conducting any transaction that could potentially overdraw your account.
  • Find an account that doesn’t charge overdraft fees: Some banks, particularly online banks and credit unions, offer checking accounts that do not charge overdraft fees. Research different banking options to find one that suits your needs.
  • Consider overdraft protection: Overdraft protection is a service offered by many banks that links your checking account to another account, such as a savings account or credit card. If you overdraw your checking account, funds are automatically transferred from the linked account to cover the shortfall, helping you avoid overdraft fees.

By taking proactive measures to manage your account balance and explore fee-free account options, you can avoid overdrawing your account and save money on overdraft and NSF fees.

ATM Fees

ATM fees can be a hidden cost that adds up quickly if you’re not careful. Using ATMs outside of your bank’s network can result in hefty fees, with the average out-of-network ATM fee totaling $4.73. To avoid these charges, it’s essential to find and utilize in-network ATMs.

One way to find in-network ATMs is by using your bank’s mobile banking app. These apps typically have a feature that allows you to locate ATMs near you that won’t charge you fees. By using in-network ATMs, you can save significantly on ATM fees over time.

Avoid ATM fees

Another option to avoid ATM fees is to get cash back at the register when making a purchase at a retailer. Many stores offer this service, allowing you to withdraw cash without any additional fees.

By avoiding out-of-network ATMs and utilizing the available alternatives, such as in-network ATMs and cash back services, you can save substantially on ATM fees and keep more money in your pocket.

Monthly Service Fees

Monthly service fees, also known as maintenance fees, can be a significant financial burden. These fees are typically charged on a monthly basis and can quickly add up over time. The average monthly service fee for noninterest checking accounts is $5.31, which may not seem like much, but it can eat into your hard-earned money.

However, there are ways to avoid these fees and keep your money where it belongs – in your pocket. One of the most common methods is by maintaining a minimum balance in your account. By meeting the bank’s minimum balance requirement, you can often waive the monthly service fees.

It’s important to note that not all noninterest checking accounts have a minimum balance requirement or monthly maintenance fee. In fact, less than half of them do, giving you plenty of options to choose from. By finding a bank that doesn’t charge monthly service fees or meeting the specific requirements, such as having direct deposit or using your debit card a certain number of times, you can eliminate these fees altogether.

Managing your finances effectively includes minimizing unnecessary expenses, and monthly service fees fall into that category. Take control of your financial well-being by avoiding these fees and keeping more of your hard-earned money in your pocket.

Why are Some Checking Account Fees Rising?

Checking account fees, like many fees, tend to rise over time. Banks increase fees to generate revenue, especially in a low-rate environment. As interest rates fluctuate, banks rely more on fee income to offset the impact of lower interest income.

Higher monthly account maintenance fees, higher balance requirements, and increasing ATM fees are examples of fee increases that customers may face.

rising fees

These fee increases are a result of banks adapting to the current financial landscape. In a low-rate environment, where the interest rates set by central banks are low, banks may struggle to generate sufficient revenue from interest-bearing accounts. To make up for this shortfall, banks resort to raising fees on various banking services, including checking accounts.

One common fee increase is higher monthly account maintenance fees. Banks may raise the fees charged for holding and managing an account, often citing the need to cover rising operational costs. Another fee increase can be seen in higher balance requirements. Banks may impose higher minimum balance requirements to waive monthly service fees, making it more challenging for customers to avoid these fees.

ATM fees, another type of fee that may be subject to increase, can be raised as banks seek to offset expenses related to maintaining and expanding their ATM networks. As banks invest in new technologies and enhance the security features of their ATMs, they may pass on some of these costs to the customers in the form of increased fees.

It is important for customers to be aware of these rising fees and understand the reasons behind them. By staying informed, customers can make informed decisions about their banking options and take steps to minimize the impact of these fees on their finances.

Common Checking Account Fees

When it comes to checking accounts, it’s important to be aware of the various fees that may be associated with them. Understanding these fees can help you manage your finances more effectively and avoid unnecessary charges. Here are some common fees that you may encounter:

  • Monthly service fees: These fees are typically charged every month for the maintenance of your checking account. However, many banks offer ways to waive or minimize these fees by meeting certain requirements. It’s important to review the terms and conditions of your account to see if you can avoid these fees.
  • Overdraft fees: When you spend more money than is available in your account, you may incur overdraft fees. These fees can add up quickly and can be quite costly. It’s important to keep track of your account balance and consider setting up alerts to help avoid these fees.
  • Non-sufficient funds (NSF) fees: Similar to overdraft fees, NSF fees are charged when you write a check or make a payment that exceeds the amount of money you have in your account. These fees can also be expensive and should be avoided if possible.
  • ATM fees: Using an ATM that is outside of your bank’s network can result in ATM fees. These fees can vary depending on the bank and the ATM used. To avoid these fees, try to use ATMs within your bank’s network or consider getting cash back when making a purchase at a retailer.
  • Paper statement fees: Some banks charge a fee for receiving paper statements instead of opting for electronic statements. If you prefer paper statements, be aware of any fees associated with them and consider switching to electronic statements to save money.
  • Foreign transaction fees: If you use your debit card for transactions outside of the United States, you may encounter foreign transaction fees. These fees are typically a percentage of the transaction amount and can add up if you frequently travel internationally. Consider using alternative payment methods or obtaining a debit card with no foreign transaction fees if you frequently make purchases abroad.
  • Account closure fees: Some banks may charge a fee for closing your checking account shortly after opening it. These fees are typically imposed to discourage customers from opening and closing accounts frequently. If you plan on closing your account, it’s important to be aware of any potential fees.

To avoid these common fees, it’s important to review and understand the terms and conditions of your checking account. Look for accounts that offer fee waivers or have lower fee structures. By being proactive and mindful of your account activity, you can minimize or eliminate these fees and keep more money in your pocket.

Common Checking Account Fees


Managing checking account fees is crucial for effective financial management. By understanding the different types of fees and knowing how to avoid them, you can save money and stay in control of your finances. Setting up low-balance alerts, using in-network ATMs, and finding an account with no monthly service fees are some effective strategies to minimize or eliminate these fees.

By taking proactive measures to avoid checking account fees, you can ensure that your money is working for you and not being consumed by unnecessary charges. It’s important to stay informed about the various fees associated with your checking account and explore ways to avoid them. With careful planning and budgeting, you can successfully navigate the world of checking account fees and keep more of your hard-earned money.

Remember, financial management is a continuous process, and staying vigilant about avoiding checking account fees is an ongoing effort. By implementing these strategies and regularly reviewing your account activity, you can maintain a healthy financial outlook and make the most of your checking account. Start taking control of your finances today and enjoy the benefits of managing checking account fees effectively.

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