What are hidden bank fees and how can I avoid them?
Whether managing your individual bank account or taking care of your small business’s bank account, you might face unanticipated, irritating bank charges. Read on to discover the seven most common hidden bank fees and how you can avoid them.
What are hidden bank fees?
Before we detail some specific hidden bank fees or charges you might face, it’s essential to understand the basics.
A bank charge (hidden or not) is a fee applied to an account by a financial institution that the account holder then becomes responsible for paying.
It may be charged on a one-time basis or an ongoing basis. A hidden bank charge is a fee you might not have known you would need to pay until the situation arose.
Customers with a loyal, long-standing relationship with a financial institution, including multiple assets and liabilities, are usually in a better position when faced with these fees and may qualify for a fee waiver.
More often than not, if you’re careful and aware of the hidden charges associated with your account, whether personal or business (be mindful that business accounts tend to face a few more hidden stipulations), you won’t have to pay anything at all.
You can redirect the money you protect to your savings account and enjoy financial peace of mind!
How to avoid bank charges: Seven hidden fees to watch out for
1. Monthly maintenance and service fees
A bank is a business that needs to earn money like any other.
Many banks will charge you monthly to keep your money in an account with them, particularly if you’ve opened a business account for professional services and transactions.
Fees vary between $4 and $25 but can often be avoided by either selecting an account that doesn’t charge them or opening a checking and savings account at the same institution.
2. Overdraft fees
Life is expensive, and at times, unexpected payments come up.
Many people accidentally overdraw their bank account at some stage. Doing this will, however, cost you.
You may be able to avoid the eventuality by setting up balance reminders if the amount in the account drops below a certain level.
It’s also worth noting that many banks offer overdraft coverage or protection, which might be a good option if you’re often faced with these fees.
3. Excessive transaction fees
In America, there is a federal limit on how many times you can withdraw from your savings account every month.
The first six withdrawals are free, but if you go beyond this, you’ll be paying anywhere from $3 to $25 per transaction above the limit.
This is easily avoided if you keep a close eye on your transactions, and it only applies if you regularly withdraw from savings (which isn’t the best way to maximize your interest).
4. External bank transfer fees
Many US banks have started to charge a fee if you’re transferring your money to an account at a different financial institution (even if it’s your account).
They will not always disclose this information before you’ve completed the transaction. To prevent this, make sure you double-check in advance.
For example, PNC has started charging $3 for making teller-assisted transfers over the phone or in person.
5. Mobile deposit and wire transfer fees
Sometimes, what seems like a convenient payment route is rife with unexpected costs.
There’s a mobile deposit fee applicable if you’re depositing checks virtually with a smartphone camera (50 cents per check), and wire transfers are quick, but costs can add up — they usually come in between $16 and $35 for domestic and international transfers.
6. Early closure and card replacement fees
If you close your bank account before a specified amount of time has passed (the amount usually varies between 90 to 180 days), you may face a fee of up to $25.
If you lose or damage your card and order a replacement, some banks will charge you a fee to send a new one.
If you’ve lost your card and you’re looking for it, you can freeze it to prevent any suspicious activity and unfreeze it if you find it again.
7. International fees and overseas ATM fees
If you’re heading off on vacation, you’ll need to be aware of international fees and overseas ATMs.
There are costs you might not anticipate, and they differ from place to place, so research is required.
To avoid expenses abroad, take out the money before your trip or order a special travel card.
You can still enjoy every vacation moment without racking up unnecessary international banking changes.
Can I claim back bank fees?
If you’re currently facing some unexpected bank fees, you may be curious whether you can claim back some of the money (if not all of it).
The answer isn’t simple, as there’s no set list of things you can and can’t dispute with your bank — it all comes down to whether or not you believe you’ve been genuinely unfairly charged.
Ask yourself these questions:
Am I in financial trouble?
Are the charges reinforcing a vicious cycle?
Are the charges disproportionate?
It may be worth trying to claim if you can respond “yes” to these questions.
Make a case directly to your bank and follow up on any correspondence you receive.
If you aren’t satisfied with how your bank handles it, take your case to a financial expert for further guidance, and explore the option of eventually taking your case to court.
Don’t forget that you have a legal right to information pertaining to your charges.
Are there hidden business banking fees?
If you’re a small business owner, many of the above fees will potentially impact you, but you’ll also need to expect other expenses on top of what you might be exposed to with a personal account.
These fees include:
Annual bank card fees
Payment fees when abroad
Fees for using an Electronic Payment Terminal
Account maintenance fees
Online access fees
Payments rejected due to lack of funds
Card replacement fees
Card limit modification fees
To get around unreasonable bank fees in your small business’s banking, do plenty of research before committing to a deal.
Study your annual fee declaration to get yourself fully up to speed with the hidden stipulations, and if necessary, negotiate fees with your bank.
You may also want to try a dedicated business account company for better rates and lower fees, such as Qonto.
Kate has written for leading publications and blue chip companies over the last 20 years.