Do you know what bank fees you're paying? Many banks charge fees for behaviors that customers don't realize are costing them money. Among them are foreign transaction fees and, perhaps most surprisingly, fees for receiving paper statements.
Nessa Feddis, vice president and senior counsel at the American Bankers Association, says banks are imposing such fees because they're offering more services to the consumer—and these services cost the banks money. "When people say the number of potential fees has increased, it's kind of disingenuous," Feddis says. "We had limited services 30 or 50 years ago—there were no debit cards, no ATMs, no online banking—so there were less fees."
However, according to a 2011 Pew study, banks do not provide important policies and fee information in a concise and easy-to-understand format, making it difficult for customers to compare account terms and conditions among banks. An update to the Pew study this year found that the length of disclosure statements for checking accounts has decreased, but it's still at a median of 69 pages long. "They're still very dense, hard to read, and hard to understand," says Susan Weinstock, director of Pew's Safe Checking in the Electronic Age Project.
Weinstock adds that consumers want a bank's fees listed for them in an easily digestible disclosure box, which Pew has encouraged banks to create (Chase, TD Bank, and Citibank have adopted the box so far). However, with many banks not on board yet, "It's really hard to make an informed decision right now," Weinstock says.
U.S. News spoke to banking experts to shed light on lesser-known bank fees and provide ways to avoid them:
1. Early account closure fee.
Many banks require you to have your account open for a certain period of time before closing it, or else you get slapped with a fee. BB&T and Citibank charge a $25 fee if your account is closed within 90 days of opening it. Meanwhile, U.S. Bank, HSBC, and PNC Bank charge a $25 fee to close an account that has been open for fewer than 180 days. "There's significant cost to opening and closing an account, and the banks are trying to recover some of their costs," Feddis says.
Odysseas Papadimitriou, chief executive of credit card comparison website Cardhub.com, adds that banks impose early account closure fees to dissuade you from closing your account at all. "It's a way to deter people from closing their accounts, because after 90 days they're less likely to leave," he explains.
To avoid that early closure fee, you can keep your account open past the minimum period.
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2. Monthly or annual maintenance fee.
A number of banks charge monthly or annual maintenance fees for certain accounts. For example, a regular checking account at Bank of America comes with a $12 monthly maintenance fee. However, if you fulfill any number of requirements, such as maintain a minimum daily balance in checking of $750 or more, you can get the fee waived.
Check your bank's policy to see if you're being charged a maintenance fee and to find out ways to avoid it.
3. Minimum balance fee.
Some banks charge a monthly fee for customers with low account balances. For example, Citibank customers who have the bank's EZ Checking account are charged $15 a month if they don't carry a minimum balance of $6,000.
"We're in an environment of low interest rates, which means that the interest banks earn on their customers' money—especially the money they get on accounts with low balances—doesn't cover the costs of providing the account," Feddis says. She says that it costs banks on average about $300 a year to provide checking account services, so enforcing minimum balance fees is one way for banks to recoup that cost.
To avoid a minimum balance fee, review your bank's policy to see what amount you have to maintain.
4. Returned deposit fee.
If you deposit a check that bounces, your bank could charge a fee. Customers of Sovereign Bank are charged a $15 fee ($25 for an international check) when a check that's been deposited is returned unpaid. Similarly, Bank of America charges a $12 fee ($15 for international checks) for a returned deposit item.