Banking without fees

In short

If you are tired of seeing your balance shrink for no good reason, this page is for you. Ask your bank for its fee schedule, which is the plain list of every charge it may put on your account. Compare that list with what you actually paid last year. Read about accounts with no monthly fee and no minimum balance, and see what each one asks of you. Learn how text alerts work, because they can warn you before a balance runs low. Find out which ATM network is free for you, and check your statement each month. If a fee shows up that you do not understand, call the bank and ask.

The whole of it

What it is

I once read about a woman who lost a good chunk of money to bank fees over one year. She was not careless. She was busy, and nobody had ever shown her where the charges hide. You have probably felt that same sting, that small gasp when a balance is lower than it should be.

Banking without fees means using an account that charges you little or nothing to hold your money and move it. The usual fees fall into a few families. There is a monthly maintenance fee, which is a flat charge just for having the account. There is an overdraft fee, which is charged when you spend more than you have and the bank covers it. There is an ATM fee, charged when you use a machine outside your bank's network. And there is a minimum balance fee, charged when your balance drops under a set amount.

You deserve a place to keep your paycheck that does not nibble away at it. That is not a favor from the bank. It is a fair thing to expect, and plenty of accounts are built that way.

How it works

If you are holding a checking account right now, it probably came with a page of terms you never read. Most of us never do. That page is called the fee schedule, and it tells you what each service costs. Banks must disclose their fees, and you can ask for a copy at any branch or find it on the bank's website.

Some accounts waive the monthly fee when you meet a condition. The condition might be a direct deposit of a set size, or a certain balance. Waive just means the bank agrees not to charge you. The trouble is that a condition can slip. A job changes, a deposit comes late, and the fee quietly returns.

That is why many people read about accounts with no monthly fee at all, and no strings attached. The Bank On national standards describe an account like this. It carries no overdraft fees and no monthly fee above a low cap. The Cities for Financial Empowerment Fund runs the Bank On program, and you can look up certified accounts on its website, bankon.org.

Credit unions are another place to read about. A credit union is a member owned cooperative that returns its earnings to members, often through lower fees. The National Credit Union Administration keeps a tool called the Credit Union Locator on its site. Mind you, you may need to qualify to join, often through where you live, work, or worship.

Overdraft deserves its own word, since it costs people a great deal. Overdraft means the bank lets a payment go through even though your balance is too low, and then charges you for it. Some banks let you ask them to decline those payments instead. A declined card is embarrassing for a moment. A fee is a bruise that lasts all month.

The numbers, and where to find yours

Your own numbers live in two places. The first is your fee schedule. The second is your monthly statement, where every charge appears as a line. Read both with a pencil in hand.

Some figures are set by law or by program rules rather than by your bank. The Bank On standards cap the monthly fee at the current figure, which the official source publishes each year and set a minimum opening deposit of no more than the current figure, which the official source publishes each year. Those limits come from the Bank On National Account Standards, and the site shows the current figure with its source and date.

Deposits are protected too. The FDIC insures money at member banks up to the current figure, which the official source publishes each year per depositor, per bank, per ownership category. The NCUA offers matching protection at federally insured credit unions up to the current figure, which the official source publishes each year. You can confirm that a bank is covered at the FDIC's BankFind tool, and a credit union at the NCUA's locator.

For the fees themselves, no law sets one price. Each bank picks its own, and they differ a great deal. That is the reason to compare. Write down the monthly fee, the overdraft fee, and the out of network ATM fee for each account you look at. Three numbers per bank. It is easy.

A worked example

Let me make up a man named Marcus, so we have something to add up. He is only a made up example, and the numbers are mine. Say he works part time at a warehouse and gets paid every two weeks. His old checking account charges 12 dollars a month unless he keeps 1,500 dollars in it. He never has that much. So he pays the fee every month.

Here is the math, with every input shown. Twelve dollars a month times twelve months is 144 dollars a year. Now add the overdraft problem. Say that twice in the year he spends a little too much, and each time the bank charges 35 dollars. Two times 35 dollars is 70 dollars. He also uses an outside ATM six times, paying 3 dollars to the other bank and 3 dollars to his own each time. Six dollars times six visits is 36 dollars.

Now add it up. One hundred forty four plus 70 plus 36 comes to 250 dollars. That is 250 dollars a year, paid just to hold a modest paycheck. Marcus is not wasting money. He simply never saw the total in one place.

Now picture what he could change. He could look up a certified Bank On account at a credit union near his home, and read its fee schedule line by line. He could ask whether it charges a monthly fee or an overdraft fee. He could set up text alerts, and he could find out which ATMs are free for its members. If those three fees all came to zero, his yearly cost would be zero dollars. Two hundred fifty minus zero leaves 250 dollars. Whether any real account works that way depends on its own fee schedule, which is why he would check it first.

Where it goes wrong

I have made my share of mistakes with money, and most came from not paying attention to small things. A few traps catch people again and again, so let me name them gently.

The first is the free account that is not free for long. Some banks offer a promotion with no fee for the first few months. Then the fee switches on. Read the fine print about when a promotion ends.

The second is the waiver you meet one month and miss the next. If your fee only disappears when you keep a certain balance, one tight month can cost you. Read the conditions on any waiver before you count on it.

The third is the opt in rule. Under federal rules, banks need your permission before they charge overdraft fees on everyday debit card purchases and ATM withdrawals. The Consumer Financial Protection Bureau explains this on its website. Read what it says, then check what you agreed to with your own bank.

The fourth is the ATM habit. Grabbing cash at the closest machine is easy. Yet that single trip can carry two fees at once, one from the machine's owner and one from your own bank. Your fee schedule will tell you what each costs.

The fifth is not checking. A statement left unread hides every mistake. Five minutes a month is all it takes. Easy to skip, costly to ignore.

Last, be wary of accounts that seem free but push other costs onto you, like paper statement charges or fees for closing the account early. Ask about those directly.

Questions to answer before you leave this page

Do you know what your bank charges each month, and could you find the fee schedule in under five minutes? Have you added up what you paid in fees over the last twelve months, and was the number a surprise? Is there a certified Bank On account or a credit union near you that you could look into this week? Do you know how your bank handles overdrafts on your account today, and what you agreed to? Do you know which ATMs are free for you, and where the closest one sits? Could you find out today whether your bank offers text alerts for low balances? And when you look at your statement next month, will you read every line?