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How to avoid overdraft and ATM bank fees

Key takeaways

  1. Common avoidable fees include monthly maintenance, ATM, overdraft, insufficient funds, and foreign transactions

  2. Eliminate fees by budgeting carefully, using direct deposit, maintaining minimum balances, and staying in your bank’s ATM network

  3. Research banks thoroughly, including their fees and fee structures, before choosing one

Fees are a part of just about everything that involves money, from ordering food delivery to getting cash from the ATM. While you can’t escape fees entirely, there are some that can be avoided. By putting in a little time and research, you might surprise yourself by what you learn and how much you can save.

Be informed and shop around for the right bank

Search for banks online and review their range of products and services. Do they include fees? If so, what kind? And how do they fit into your current budget?

Of course, more goes into choosing a bank than just fees. There’s the type of account you want to open, the services you’re looking for, the accessibility of the bank, customer reviews, and reputation. Then there’s the day-to-day stuff like hours and customer service. That’s a lot to consider, but it’s good to look at the whole picture when deciding where to put your money.

Avoid these common types of bank fees

Understanding the different types of fees banks charge can help you make more informed decisions about your banking habits. Here are some of the most common fees that can eat into your hard-earned money:

  1. Monthly maintenance fees. Banks may issue regular charges for maintaining your account. Many banks will waive this fee if you maintain a minimum balance or use direct deposit at a certain level

  2. ATM fees. These are charges for using ATMs, usually ones outside your bank's network. Banks may also waive some of these fees if you meet certain account requirements

  3. Overdraft fees. When you spend more than what's available in your account, you may incur penalties

  4. Insufficient funds fees. Banks may charge this fee when a transaction is declined due to lack of funds

  5. Foreign transaction fees. Purchases made outside the United States can incur additional charges. It’s easy to forget how these fees can add up when you’re on vacation, traveling for work, or buying things online

  6. Wire transfer fees. These are charges for electronically transferring money to other accounts

The best ways to eliminate fees

You can significantly reduce or eliminate many common fees when you’re in control of your banking habits and being strategic about how you manage your accounts. The key is being proactive and understanding your bank's policies. Here are some proven strategies to help you avoid unnecessary charges:

  1. Stick to your monthly budget and track spending. Plan your expenses to help prevent overspending that leads to fees. There's many great apps that offer tracking tools and spending threshold alerts

  2. Set up direct deposit. Many banks waive monthly maintenance fees when you use direct deposit

  3. Maintain the minimum daily balance. Stay above the required amount to help avoid maintenance fees

  4. Use only in-network ATMs. Stay within your bank's ATM network to prevent additional charges

  5. Set up overdraft protection. Linking accounts can help cover transactions when funds run low

Take advantage of your bank's tools and services

Your bank may offer tools and services that can help you manage your money more effectively and avoid fees. By taking advantage of these features, you can gain better control of your finances.

  1. Sign up for monthly statements and alerts, such as low-balance alerts. Many banks will give you a discount or even waive certain fees when you sign up for e-statements

  2. Bank online  or in-app . Check your balance in real time, whenever it’s convenient for you. Plus, you could set up recurring payments around your pay cycle

  3. Get cash from in-store purchases. Use your debit card  to get cash back when checking out at a store to avoid taking out cash at ATMs that may charge a fee

  4. Maintain multiple accounts at your bank. Some banks offer free services for having more than one account

  5. Use services like Zelle®, PayPal, and Venmo. These apps can be essential because wiring money is typically more costly and involved

    By applying the tips in this article, you can go a long way toward understanding and avoiding fees—and saving some cash

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This article is for general informational purposes only. It is not intended to provide specific financial, investment, tax, legal, accounting, or other advice and should not be acted or relied upon without the advice of a professional advisor. A professional advisor will recommend action based on your personal circumstances and the most recent information available.

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