How to Avoid Checking Account Fees: A Guide to Saving Money

Banks, credit unions, and online financial institutions typically charge a range of fees for checking accounts.

If you aren’t paying close attention to your financial institution’s fee schedule, you could be throwing away money each month since most of these fees can be avoided or waived altogether by meeting specific minimum monthly requirements.

A MoneyRates survey found that Americans spend just under $160 on average in checking account fees.

MoneyRates created this guide to checking account fees to help you better understand the many types of fees banks and credit unions implement on checking accounts and, more importantly, how to avoid paying them.

Common Checking Account Fee Amounts

Breaking Down Checking Account Fees

Many financial institutions implement a monthly fee for maintaining a checking account, and a wide range of fees are also tied to account usage. Below are the most common types of checking account fees you’ll encounter.

According to the Federal Deposit Insurance Corporation (FDIC), financial institutions implement various fee schedules for checking accounts, depending on the type of account and how it’s used. The following are the most common types of checking account fees:

Monthly Maintenance Fee

This fee is likely the most common fee assessed by banks and credit unions. Each month, banks levy this charge for having an open account at their institution. Monthly maintenance fees are also one of the easiest fees to get waived.

Overdraft Fee

The overdraft fee, also called an insufficient fund (NSF) fee, is assessed whenever you overdraw your account by writing a check that exceeds the balance in your account. This fee can be as steep as $30 to $35 at some banks.

ATM Fee

An ATM fee is a charge for using an ATM outside your bank’s network. Both the bank that operates the ATM and your own bank can charge you for using an out-of-network machine. Thus, you might encounter both fees for a single transaction if you use an ATM outside your bank’s network.

Returned Deposit Fee 

A returned deposit fee, often referred to as a returned item fee, is charged by a bank when a check or electronic payment deposited into your account is returned unpaid due to insufficient funds in the issuer’s account.

Stop Payment Fee

A stop payment fee is a charge that a bank imposes when a customer requests to halt the processing of a check or pre-authorized electronic transfer that they previously authorized. This fee covers the bank’s service of stopping the transaction before it is completed, helping to prevent unwanted or potentially fraudulent payments.

Check Printing Fee

Banks typically charge a fee if you request personal checks for your account. Basic checks are less expensive than personalized checks or carbon copy checks.

Cashier’s Check Fee

A cashier’s check is a type of check issued by a bank when a customer can’t use a regular check. Customers pay the bank the amount of the check plus a service fee. The bank then issues the check to the designated payee.

Cashier’s checks are used for significant transactions where the payee requires assurance that the funds are secure and will be available, such as real estate purchases and vehicle purchases, or when large payments are needed, and personal checks are not accepted due to security concerns.

Wire Transfer Fee

A wire transfer fee is a charge imposed by a bank for sending money electronically from one account to another, either domestically or internationally.

Wire transfers are typically used for quick, guaranteed payments, making them essential for urgent transactions where checks or other payment forms are too slow or not accepted.

This fee covers the operational costs associated with the secure and immediate transfer of funds between financial institutions.

Early Account Closing Fee

An early closing fee is a charge some banks impose if you close your checking or savings account soon after opening it—typically within 180 days. This fee compensates the bank for the administrative costs associated with setting up the account and the early termination of the account agreement.

Explore Top Checking Accounts

Many banks offer branch and online checking accounts, and there’s strong competition to offer the lowest fees and best rewards. Use the listing below to find the best checking account for your finances.

Why Do Banks Charge Fees?

Brick-and-mortar banks and credit unions have a lot of overhead regardless of whether they are small regional institutions or large banks with a national footprint. Paying the monthly lease for their space is a significant recurring expense, to say nothing of utilities, building and common-area maintenance, operating expenses, and other routine expenditures. They cover these expenses and often make a profit by charging fees.

Meanwhile, online banks and financial institutions don’t have many of the same recurring expenses, so they can reduce or eliminate many common checking account fees.

How Checking Account Fees Affect Your Financial Health

If you have a six-figure checking account, you likely aren’t concerned about the seemingly minor fees banks charge monthly.

If you live paycheck to paycheck and must watch every penny, checking account fees can take a big bite out of your much-needed money and even jeopardize your financial health.

A monthly maintenance fee is often required to maintain a checking account, especially if you don’t have enough funds in your account to meet your bank’s minimum requirement to waive maintenance fees.

However, losing money to costly overdraft and returned check fees can severely impact your financial health. These fees could exceed a hundred or more dollars per month – money you could keep in your account with more vigilant account management.

8 Smart Strategies to Avoid Checking Account Fees

We’ve outlined the most common checking account fees and how they can chip away at your account balance if you aren’t careful.

The good news is that you can avoid most checking account fees altogether. Here are eight strategies you can deploy to avoid getting dinged by your bank each month.

Choose the Right Bank or Credit Union

Different banks and credit unions usually have a wide range of fee schedules. Financial institutions also typically have different tiers for their checking account products, and monthly fees vary depending on minimum account balances, account usage, and other criteria.

When you’re considering opening a checking account, ask to see the bank’s fee schedule. Fee schedules are typically published online at banks’ websites. Evaluate the charges associated with different checking account options you’re interested in.

Ask how fees might be waived and strategies for avoiding them. Ensure your bank’s checking account aligns with your financial strength and needs.

Maintain Minimum Balance Requirements

Most banks offer free checking provided you maintain a certain daily ledger balance. Minimum balance requirements for standard checking accounts often range from $500 to $1,000. Some banks may require a combination of factors, such as maintaining a minimum balance and having one qualifying direct deposit each month.

Use Direct Deposits to Reduce Fees

Having your paychecks or 1099 pay from a freelance gig directly deposited into your checking account is an easy way to get your monthly maintenance fees waived.

Monthly direct deposit requirements may be as low as $1,000 for some standard checking accounts and $20,000 for some premier checking accounts.

Another benefit of direct deposit is that some banks will deposit your paycheck up to two days before your official payday.

Monitor Accounts Regularly to Prevent Overdrafts

Overdraft and insufficient funds charges are the highest fees levied by banks and credit unions. Monitoring your account daily or several times per week can prevent you from overdrawing your account. Mobile banking apps on smartphones simplify account monitoring since you can check your account anywhere, anytime.

Look for Banks That Waive Monthly Fees

Banking is a competitive industry. Some banks offer no-fee checking accounts that waive the monthly maintenance fee without requiring a monthly minimum or qualifying direct deposit.

Typically, these no-fee checking accounts are only offered by online banks and credit unions. However, students can often find no-fee accounts as well. These banks usually levy fees if you overdraw your account or bounce a check.

Use Mobile Apps and Alerts for Account Management

Mobile banking apps have pioneered new ways for people to access and manage their checking accounts.

In addition to paying bills with just a few taps on the screen, you can track expenses and get alerts when your account balance is too low. You’ll also be able to view your account balance whenever you want, which can help you avoid overdrawing your account.

Choosing ATMs Wisely to Avoid Extra Charges

Using an out-of-network ATM to withdraw cash will cost you about $5. You can avoid this unnecessary fee by withdrawing cash at places that don’t charge, such as grocery and convenience stores.

Alternatively, you could withdraw a larger sum of cash than you think you’ll need and stash some money at home to use later so you won’t have to swing by an ATM whenever you need additional cash.

Understanding the Network and Partnership ATMs

It pays to know where your bank’s ATMs are located so you won’t waste money on ATM fees.

Online-only banks often have a more extensive network of ATMs you can use without penalty, versus traditional banks, which only allow you to use their machines free of charge.

Case Studies: Banks with No-Fee Checking

Switching banks can be a pain. But when it comes to free checking, the time spent making the switch is the effort. The following banks offer no-fee checking accounts, but this is just a tiny sample of the many financial institutions with free checking accounts.

SoFi Checking and Savings Account

Like many online financial institutions, SoFi can offer a range of competitive checking account features, including no account fees.

Users will incur fees if they use an out-of-network ATM or overdraw their accounts, but there are no account maintenance or overdraft fees for a SoFi checking account.

Additional features include competitive APY interest on savings account balances and an early paycheck feature that allows account holders with regular direct deposit to access funds up to two days early.

Discover® Checking Account

Discover made its name in the credit card industry and recently began offering checking accounts. Discover’s online checking account has no regular fees associated with checking accounts. However, outgoing wire transfers will cost users $30 each.

Discover checking accounts can be set up for direct deposit and overdraft protection, and they also feature early access to payday funds through early pay. Users also can access more than 60,000 fee-free ATMs nationwide.

Capital One 360 Checking Account

Capital One’s checking account features access to more than 70,000 no-fee ATMs, along with no monthly maintenance or other common fees.

Users can deposit money either by direct deposit, Zelle, at an in-network ATM, or via mobile check deposit. The 360 checking account also features a robust mobile app for online banking and a debit card for point-of-sale purchases.

Essential Takeaways

When it comes down to it, there’s no real reason why anyone should pay checking account fees. Keeping existing accounts open due to familiarity and long banking history makes sense, provided you aren’t wasting good money each month on banking fees.

If switching to a no-fee checking account could save you several hundred dollars each year, perhaps it’s time to open a new account.

If you are resigned to keeping existing accounts that routinely charge fees, consider these strategies to minimize the chances of having fees assessed by your financial institution.

• Maintain the required monthly balance. This could be difficult when you are on a shoestring budget, but it’s also the simplest way to avoid monthly maintenance fees.

• Set up direct deposit. If you need a checking account, you likely have some form of regular pay. If you get a paycheck or money from a side hustle, setting up direct deposit is usually enough to waive maintenance fees.

• Always watch your balance. Banks collect the most significant fees on overdrafts and returned checks. Financial responsibility starts with vigilantly monitoring your checking account balance, which is easy to do using a mobile banking app. You can check your account status anytime, so you should always know if you have enough funds or if you need to wait.

Being proactive with your checking account could save you hundreds of dollars each year in monthly fees. Opening a new no-fee account also could provide a fresh start that helps you change your relationship with your bank.