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Understanding Your Checking Account Fees and How to Avoid Them
If you are opening a checking account, you might notice that it may come with fees. Or you might become aware of fees when you review your account’s monthly statement. Although fees can be common on checking accounts, there can also be a variety of ways to avoid many of them. Let’s review the types of fees you might expect as well as how you might be able to avoid them.
What are checking account fees?
Some checking account fees are charged on a regular basis, such as a monthly maintenance fee. Other types of fees are associated with different occurrences, such as overdrafts, that require banks to take measures beyond normal, day-to-day account activity. Still other fees are associated with special services, such as obtaining money orders.
The good news is that many banks offer customers different ways to avoid or minimize the different types of fees.
Types of checking account fees
Banks will explain their fees, as well as ways to avoid them, in the terms and conditions for their accounts. It’s a good idea to review those terms and understand the fees, which might include:
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Monthly service fees. A service fee, also known as a monthly maintenance fee, is a basic charge for having an account. Many banks give account holders numerous ways to avoid this fee, such as maintaining a minimum balance, setting up direct deposit or keeping a certain balance across a number of accounts.
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ATM fees. The debit card in your wallet is a quick and convenient way to deposit or withdraw money 24/7 from automatic teller machines. Your bank is likely a member of an ATM network. If you use an ATM that is outside the network, you may incur a fee. Some banks charge their own ATM fees. However, many banks offer ways for customers to avoid ATM fees or be reimbursed for them, such as maintaining a certain balance.
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Overdraft and returned check fees. If you spend more than is in your account, one of two things could happen. The bank might cover your overdraft and then charge you an overdraft fee, leaving your account in the red until you deposit more money. Or it may return your check to the payee and charge you a "returned check fee" for NSF — non-sufficient funds. Read your terms and conditions carefully to see how your bank handles overdrafts.
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Other fees. Some banks try to encourage online banking by charging fees for having paper checks or receiving paper statements. Others may charge a fee for closing an account within 90 days or so of opening it. If you don't use your account for certain amount of time, it may be considered "dormant" and be assessed a monthly fee. You might also encounter fees for replacing a debit card or stopping payment on a check.
How you might avoid checking account fees
Now that you know which fees to look out for, here's how you might be able keep them from affecting your checking account.
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Set up direct deposit. Many banks waive monthly service fees if you set up a qualifying direct deposit.
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Maintain the minimum balance. Direct deposit helps with this, too. The amount of the minimum balance required is typically related to an account’s features. A basic checking account may require a lower minimum balance than an account with more benefits associated with it.
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Enroll in overdraft protection. Overdraft relief might include a grace period to cover the overage, reimbursement of overdraft fees, or linkage to a savings account or credit card.
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Use your bank's ATMs. Around town, stick to your bank's automatic tellers. If you're traveling, look for ATMs that are part of your bank's network.
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Take advantage of your status. Students and seniors may get certain benefits, such as no-fee checking.
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Develop a relationship. Banks may waive fees for qualifying customers, such as those who maintain more than one checking, investment, or savings account.
Checking accounts from TD Bank
TD Bank offers a range of checking products to help meet your financial goals, whether you're looking for convenience, competitive interest rates, or tools for budgeting and financial planning.
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