How to Never Pay a Bank Fee Again

Bank fees are one of the purest forms of financial waste: money you pay for nothing in return, often because of small oversights that compound into hundreds of dollars per year. According to the Consumer Financial Protection Bureau, US banks collect more than $10 billion per year in overdraft fees alone, and most of them are avoidable.

This guide walks through the specific fees, why banks charge them, and how to eliminate each one.

Monthly maintenance fees

Many traditional chequing accounts charge $10 to $25 per month unless you meet a minimum balance or direct-deposit requirement. Over a year that is $120 to $300 for a service you should be getting for free. Every major online bank and most credit unions offer chequing with no monthly fee and no minimum balance. Switch. The process takes about an hour and stays fee-free forever.

Overdraft fees

Overdraft fees are what banks charge when you spend more than your account balance. They average around $35 per event and are famously punitive on small transactions (paying $35 to overdraw by $3 on a coffee). Three approaches eliminate them: choose a bank that does not charge overdraft fees at all (an increasing number of online banks and some large legacy banks); opt out of overdraft coverage so the transaction is simply declined instead of processed and fee-charged; or maintain a small buffer plus a low-balance text alert.

ATM fees

Out-of-network ATM fees are charged twice: once by the ATM owner (often $3 to $5) and once by your bank (often $2 to $5). Solutions: use only in-network ATMs (your bank app usually maps them), use a bank that reimburses out-of-network fees (many online banks and credit unions), or get cash back at retailers for free.

Foreign transaction fees

Many cards and accounts charge 1 to 3 percent on transactions in foreign currency. If you travel internationally with any frequency, use a card or debit card that charges zero foreign transaction fees. Many travel rewards cards and some online-bank debit cards waive this.

Minimum balance fees

If your account requires a minimum balance to avoid fees, either commit to maintaining that balance or switch accounts. Locking a few thousand dollars in low-yield chequing to avoid $10 monthly fees costs you more in lost interest than the fee itself.

Non-obvious fees to check

A quick audit of your last three months of statements often surfaces smaller fees: paper statement fees ($1 to $3), inactivity fees on accounts you rarely use, wire transfer fees (both incoming and outgoing), and cashier check or money order fees. Most of these have free alternatives if you ask or switch account types.