The Sneakiest Bank Fees Costing You $53 a Month — and How To Stop Them
Bank accounts are incredibly useful financial products. They let you store money that can accumulate interest and is easily accessible. However, some of these same accounts have sneaky fees that add up over time.
Eventually, some people look back on their fees and realize they could have used that lost money for a utility bill, groceries or other essentials.
These are the bank fees that show up often.
Monthly Maintenance Fees
Some banks charge monthly maintenance fees if you have a low balance or do not make enough deposits in a given month. The requirements vary for financial institutions that charge these fees, but you don’t have to deal with them. Many banks have nixed monthly maintenance fees or made it very easy to waive them.
Alex Quintana, founder of Arca Savings, has worked at Citibank for seven years. He explained how monthly maintenance fees can trip people up.
“[Monthly maintenance fees are] triggered by minimum-balance requirements. Bank of America's Advantage Savings pays an APY of 0.01% and charges $8 a month unless you keep $500 on deposit. To illustrate how hurtful this fee is, imagine as a customer [that] all year long your average balance was $1,000 but one month you slipped below that $500 minimum. For the year, you would earn 10 cents in interest, but pay $8 in fees,” Quintana said.
That comes up to $96 per year if you have to pay the fee each month. He also mentioned that it’s not unique to Bank of America and that many of the big banks participate in this business model.
“Chase, Wells Fargo, Citi and US Bank use [a] similar fee and minimum-balance structures while paying the same 0.01% APY,” Quintana added.
The APY Gap
Although you won’t be charged based on APY, since it reflects how much interest you receive for keeping money in your bank account, you can be missing out on higher rates if you stick with your current bank. Quintana referred to this as an invisible fee that can get quite costly, depending on how much cash you have sitting on the sidelines.
“There is a significant gap between the APY big banks pay (averaging 0.01%) and what top online banks pay (3.1% to 4.2% APY). For every $10,000 in savings, you could earn $310 to $420 in interest at an online bank. Over 10 years with no new deposits, the same $10,000 grows to roughly $10,010 at a big bank versus $13,400 to $14,800 at an online bank. That $3,400 to $4,800 gap in passive earnings never shows up on a single statement,” Quintana said.
The total cost for the APY gap depends on your current rate and what you can get from an online bank. The 3.1% to 4.2% APY range Quintana shared will fluctuate over time based on changes to interest rates. However, it demonstrates how much money people miss out on by ignoring this key detail.
Inactivity and ATM Fees
While monthly maintenance fees are the most common and you can end up with a massive APY gap if you aren’t careful, there are two additional fees to monitor. Melanie Musson, insurance and finance expert at Clearsurance, highlighted two sneaky fees that many people miss.
“Some banks charge a fee on your accounts, especially checking, when they haven’t been active for three months, six months, a year or whatever threshold the institution sets. That fee can be automatically deducted from your account and if you’re not paying attention, your account will slowly drain from inactivity,” Musson explained.
She also explained that most banks do not charge for in-network ATM withdrawals, but out-of-network machines are an exception.
“If you don’t realize your go-to ATM is out of network, you’ll waste a lot of money on fees,” she said.
These fee amounts vary. It’s realistic to get a $5 out-of-network ATM transaction fee and inactivity fees often range from $5 to $20 per month, according to Achieve. If you make five out-of-network ATM transactions each month, you can end up with $25 in fees.
How To Stop Sneaky Bank Fees
Researching banks to see which ones have higher APYs and fewer fees can help you avoid most of these extra costs. A large enough balance will also work, but you should verify your bank’s balance requirements to ensure you can get any fees waived. If you do ATM transactions often, make sure you stick with in-network options or select a bank that has more coverage.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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