Bank Fees

Banks are a commercial business, and so levy charges against you for the provision of their services. Unlike the interest they pay you for the use of your funds for their lending services, banks generally charge a fixed fee for their services.

The number and range of fees and charges levied by banks against their customers varies widely from bank to bank. However, the average price of maintaining a bank checking account is currently about $200 a year.

In addition, the range of fees varies depending on the type of bank account you have. There are certain fees which only apply to business banking for example.

ATM Surcharges

Some banks may charge for ATM usage. Even if not, you should always try to use only your bank's machines in order to avoid the additional fee from the 'foreign' ATMs. You can also use surcharge-free ATMs. One way to avoid ATM fees is to ask for additional cash back when you make a purchase with your bank's debit card; for example, when buying groceries. You should also consider taking out more each time in order to make fewer withdrawals. Make sure you look after your ATM card well, as some banks charge a lot to replace it.

Bounced Check

If you don't have enough in your account to cover all the checks you've written, the bank will usually impose an insufficient funds fee (NSF). To avoid this charge (usually around $25), when you make a large deposit ask when it will clear, and don't write checks against that amount until it does. If you think that it still might happen, consider getting overdraft protection (described below).

Cancelled Check Return Fees

If your bank doesn't include cancelled checks along with the monthly statement, they may charge a fee for any cancelled checks you request.

Check Printing

There are a number o banks that offer free checks for first-time account holders, senior citizens, students, account holders with a large minimum balance, and certain others. If your bank does not offer free checks, consider buying your checks direct from a check printer rather than from the bank, as the cost savings will be substantial.

Closed Account

Some banks will charge you a fee if you close an account that hasn't been open for a sufficiently long time (for example, one year).

Low-Balance Penalty

Many banks will charge a penalty if your balance falls below a certain amount. In addition, most big banks will offer "free" checking if you maintain a substantial balance (typically $2,000 to $4,000). However, you should understand that this offer isn't really free at all, as you're simply paying for the opportunity of tying up your money in a low- or no-yield account while the bank lends it out at a hefty interest rate. Find out if the calculation is based on the balance on a certain day of the month, the lowest balance in the month or your average daily balance, so you can work the system to your advantage.

Maintenance Fees

Make sure any maintenance fees are competitive with what other banks are charging. In some cases, you might be offered a free checking account if you're a shareholder of the bank (sometimes even a single share is enough), if you use direct deposit for your paychecks or if you limit your transactions.

Overdraft Protection

You should ask for overdraft protection if there's any chance you might bounce a check. Overdraft protection provides you in effect with an instant loan, and although the interest rate might be high, if you pay it off quickly it should be much less expensive than the bounced check fee. Some banks may still charge a fee when your balance falls below zero even with overdraft protection, but this will be significantly less than the bounced check fee. If they do charge a fee, find out how it's calculated (per check? per day?).