This is a very common question, especially among those who are new to banking. Some of them may have been surprised by the huge fees on their bank account, which caused them to ask: how does banking fee work, and what can I do to avoid them?
How does bank fee work?
A bank fee is a penalty that banks charge when you don’t follow the rules or regulations they set up. For example, Overdraft fees are charged when you make a purchase or withdrawal from an account that has insufficient funds in it to cover the transaction. Transaction fees are charged for specific services like using an ATM machine or overdrawing your account above the agreed-upon limit. Account maintenance fees are charged for keeping an account active with a large balance or having more than one checking account at a time, depending on how many accounts you have open with them. These can add up quickly if you’re not careful. Fortunately, there are a few platforms that offer no fee banking services.
Is a fee a bank charges you for having an account?
It’s easy to get confused about the difference between a fee and a charge. But if you’re wondering how banking fees affect your bank account, it’s important to understand the difference.
A fee is a fee that charges for specific services provided by the bank. This might include overdraft fees, insufficient funds fees, or ATM fees. According to the experts at SoFi, “Some banks also charge for wire transfers or checks written on the account.”
A charge is something that happens when there is not enough money in an account to cover an expense (such as paying off credit card debt).
How do I avoid fees on my checking account?
Here are a few tips that will help you avoid fees on your checking account:
- Use online banking.
- Avoid using a bank’s ATMs or branches if possible.
- Use a debit card instead of a credit card, as debit cards help you avoid overdrawing your account and incurring additional fees.
- Sign up for a direct deposit to ensure that you’re always able to access the funds in your account without paying fees on checks or money orders.
- Use online bill pay services to make payments from any computer with an internet connection, rather than depositing checks into the bank and then writing another check when paying bills electronically (this can also help you avoid overdrawing your account).
What fees do banks usually charge?
Banks usually charge fees for overdrawn accounts, but they can also charge service fees, deposit fees and transfer fees.
- Overdraft Fees: If your account goes below zero, you’ll pay an overdraft fee. These are often the most expensive charges a bank can levy against you (up to $30 per transaction), so it’s important to know how much money is in your account before making any purchases or withdrawals.
- Service Fees: Banks charge service fees as a way of keeping their costs down if they have to deal with customers who don’t know how to manage their finances. These include things like late payments on loans or credit cards, bounced checks and other situations where someone has been irresponsible when using their account.
- Deposit Fees: Most banks will charge customers who want to deposit cash into an ATM machine outside of regular business hours (which varies from bank to bank).
As you can see, banking fees are important to understand. It’s important that you know how much money is being deducted from your account every month. However, it’s also worth noting that there are many ways to avoid these fees with some simple steps.