Bank Fees Hit Record Highs — Here’s How to Easily Avoid Them

Woman using her debit card at an ATM
Photo by bokan / Shutterstock.com

Having a checking account could cost you more than ever this year.

Average overdraft and ATM fees have reached record highs, according to the latest annual checking account survey from Bankrate. The good news is that it’s perhaps easier than ever to avoid such fees.

For its survey, Bankrate examined fees at 10 banking institutions in each of the 25 largest markets in the U.S.

The findings show the average overdraft fee is now $33.38. That reflects a 1 percent increase since last year and is a record high.

The average cost of using an out-of-network ATM is $4.69, reflecting a 2.6 percent increase since 2016. It is the 11th consecutive year that the cost has increased. This cost comes from two different fees:

  • ATM surcharge (levied by the bank that owns the ATM you use): Average is $2.97
  • Fee to use another bank’s ATM (levied by your bank): Average is $1.72

“Banks continue to lean on fees to make money, as low interest rates and regulatory pressure have taken a bite out of profits,” Bankrate says.

Dodging bank fees

There are multiple ways to avoid having to pay overdraft fees, including:

  • Canceling overdraft protection: If you currently receive overdraft protection from your bank, opt out of it. If you opt out, your debit card will be declined at checkout if you try to spend more money than is available in your checking account. That way, you won’t incur an overdraft fee.
  • Signing up for alerts: Set up an electronic alert so you receive a text message or email when your account balance falls below a certain amount that you specify. Or set up a daily alert so you are notified of your balance every day, regardless of whether it’s running low.
  • Asking for a fee to be reversed: As we detail in “How to Get Credit Card and Bank Fees Reversed,” many institutions will grant a courtesy fee reversal for the first overdraft occurrence or allow a certain number of overdrafts in a specified period. You never know unless you ask.

Some folks avoid overdraft fees by linking their checking and savings accounts. That way, money will be pulled from the savings account if the checking account doesn’t have enough money to cover a purchase. This can trade one problem for another, however, by whittling away your savings in the name of everyday purchases. So consider the option carefully before using it.

There are also multiple ways to avoid ATM fees, including by:

  • Using in-network ATMs: Many folks carry an internet-connected smartphone everywhere they go. Use yours to find your own bank’s closest ATM when you’re out and about and need cash unexpectedly.
  • Planning ahead: Carry a certain amount of cash on you at all times if you use cash often. My household tries to avoid using cash to make tracking expenses easier, but we keep a little cash at home. It’s meant primarily for emergencies — like when cash registers are down after a hurricane — but we can “withdraw” from the stash if we need cash unexpectedly. It saves us ATM fees and a trip to the ATM.
  • Withdrawing cash at the grocery store: Avoid ATM fees and the inconvenience of finding an in-network machine by paying for your groceries with a debit card and getting cash back.

For more tips like these, check out “14 Ways to Avoid Paying Irritating Bank Fees.”

Switching banks

One way to avoid both overdraft and ATM fees — and possible other bank fees — is to switch to a bank that charges fewer or lower fees.

As we report in “11 Ways to Find a Bank With More Bang for Your Buck,” multiple types of institutions tend to be cheaper alternatives to big national banks, and sometimes to brick-and-mortar banks as a whole.

Online banks are an alternative you’ll see commonly mentioned here at Money Talks News. While online banks don’t have in-network ATMs, some waive a certain amount of out-of-network fees in a specific period. Depending on your situation, though, alternatives like a community bank or credit union might serve you better.

If you find an institution worth switching to, check out “5 Simple Steps to Painlessly Switch Banks.”

Do you have any bank-fee-avoidance advice to add? Share it with us by commenting below or on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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