How to Bank Without the Fees

When I was in college, a major bank had a deal set up with my university. Students could open a student checking and savings account within the first two weeks of the semester for FREE. No sign-up fee, and only a minimum deposit of $500. I’ve always been a good saver, so I had that $500 ready. I was 18, and I went with my mom and we snagged ourselves that deal. I felt like I was killing it. Hello, adulthood!

My Introduction to Bank Fees

Flash forward to my senior year. I was back on campus after a summer internship in Washington D.C, where I’d lived off credit cards. I had over $1,000 in debt on a credit card. I wasn’t the finance whiz that I am now, but even I knew that credit card debt was not something you want to be lugging around. I resolved to get out of debt ASAP. I picked up two on-campus jobs, in addition to the one I’d held since freshman year.

With three jobs, my income tripled, and I was able to make frequent payments on my debt. And boom! That’s when the bank fees started rolling in. Fees for withdrawing money too often. Fees for transferring money between accounts too frequently. The fees were everywhere, and they were killing my debt payoff.

Most of the time it was a $10 fee. Let me take this opportunity to say that I earned $10 per hour at two of my jobs, and less than that at the third. A $10 fee was a lot of money to me. Getting hit with two fees a month was the equivalent of half a shift at my cashier job. Plus, it slowed down my debt payoff process. I couldn’t believe I was being punished for moving around my own money.

I felt betrayed by my bank. Doubly betrayed, in fact, because I was working so hard to be good with my money. I was doing the smart thing by getting out of debt, and my bank was the one standing in my way. Why were they so intent on taking my money? I felt like my bank should be an ally, not a foe.

What really compounded my frustration is that my bank was very stand-offish in their handling of my fees. I was only 22 when this happened, and for all intents and purposes, I was a money newbie. I didn’t feel supported or informed by my bank, which turned me off. When the recent news about Wells Fargo cheating it’s customers came out, it flashed me back to the poor service I felt I got at my bank. Banks have an uphill battle to fight to get into people’s good graces. Fees only make their image worse.

How I Beat the Fees

It took me two years to finally break ties with my first bank. They didn’t make getting out any easier than they had made fee avoidance. I honestly don’t know how much money I lost to fees, but even $1 is too much. I now bank with a local credit union, and I’ve been charged a fee exactly twice in the four years I’ve been with them. It’s 100% possible to bank without the ridiculous fees that a lot of banks try and slip past you.

I want everyone to be able to learn from my experience. I want you to be able to avoid bank fees like a ninja avoids detection. So allow me to give you a brief breakdown of the kinds of fees you commonly see at banks - and how to avoid them. There are a lot of fees that a bank-specific, so I’ll just give a broad overview here.

Types of Fees Your Bank Might Charge

Early Closure Fee

Banks want you to open an account and keep it open. Often if you try to close it within the first 90 days, banks will charge you a fee.

Foreign Transaction Fee

If you buy something from another country with a U.S. credit or bank card, banks typically charge a conversion fee. This foreign transaction fee is generally to make up the exchange rate and to provide protection for buying in foreign markets.

Maintenance Fee

This can be one of the hardest to avoid. Many banks charge you simply for having a checking or savings account.

Minimum Balance Fee

If you don’t keep a certain amount of money in your bank account, banks will often charge you a fee. This has got to be the one that infuriates me the most. I mean, what is the logic here? If I keep $500 in the bank account it’s no problem, but $400 suddenly becomes more expensive on the bank’s end?

Overdraft Fee

Charged when a withdrawal from an individual's bank account exceeds the available balance.

Withdrawal Limits

Banks will often charge you for transferring money between accounts too often. They place limits on certain accounts to try and get you to keep money in that one account, rather than move it around.

Why Fees Exist in the First Place

Banks are a business, and for many of them, fees are a way to offset costs. It costs banks an average of $300 a year to provide checking accounts to customers. By adding in fees to agreements, banks try and make up some of that cost.

How to Avoid The Fees

While I respect that banks are businesses that need to make money to stay alive, I don’t respect the use of fees as a way to do that. Charging customers $12 a pop to keep a minimum balance isn’t the way to generate goodwill. I avoid fees as much as possible, and I suggest you do so as well.

If you want to avoid the early closure fee:

Keep your bank account open at least two days past the timeframe the bank requires. Just put a reminder in your phone for two days past the 90 or 180-day minimum timeframe, and close it afterward.

If you want to avoid the maintenance fee:

You can usually do so by following one of the bank’s requirements. Usually, it’s something along the lines of keeping a minimum balance of a few thousand dollars in that or in linked accounts.

If you want to avoid the minimum balance fee:

You just have to keep the minimum balance in the account. If that’s something you’re struggling to do, call the bank and ask them if they can lower the amount for you or switch you to an account that doesn't have a minimum balance requirement.

If you want to avoid overdraft fees:

Stay on top of your accounts. This is one of the most dangerous fees out there, as you could potentially get charged for every transaction that happens once your account goes negative. You have got to stay on top of your bank balance - specifically, your available balance. Some banks also offer an option to pull from a savings account if you overdraft on a checking account. This can save you the fee, so ask if your bank offers it.

If you want to avoid the withdrawal limits fee:

Try opening different checking and savings accounts for different goals. Don’t pool your savings into one account that you need to pull from for different reasons. Have a separate account for an emergency fund, for travel, and for gifts. This way, you’re likely to avoid going over the withdrawal limit from one account.

If you want to avoid the foreign transaction fee:

Try using a credit card that doesn’t charge for foreign transactions. I use the Capital One Venture Rewards Credit Card, which comes with no such fee.

If All Else Fails, Call Your Bank

It’s also important to get comfortable with the idea of calling your bank. I was charged a $10 withdrawal limit fee earlier this year by my credit union. I solved the issue by calling them. I asked them to remove the fee since I’d been a customer for four years with no problems, and they did!

If you feel that you’re being charged fees unfairly or far too often, call your bank to negotiate. Oftentimes they’ll be happy to waive a one time fee. They might also be able to set you up with an account that works better for you if you find yourself incurring fees frequently.

Banks know they have a little bit of an image problem, especially when it comes to millennials. Many millennials are scared by the Great Recession, so they view banks in a negative light. Most customer service departments are willing to work with you in some way so that they can keep your business.

I’m anti-fee, and I encourage you to be as well. There’s no need to pay any of these (or others not listed!) if you pay attention to your finances.
Tip: Has your bank charged you one fee too many - and they won't budge on removing the fees? Take our personalized recommendation tool to find a bank that will give you the services you need, without all the fees to match.