Ask Karen Gibbs

Veteran business correspondent Karen Gibbs answers your personal money questions and addresses current topics that affect YOUR finances on a daily basis. Karen is the financial expert in your corner--no question is too basic or too small. Karen boils down the issues simply: here's what you need to know, and here's what you need to do. Send your money questions to and post your comments below.



How to avoid bank fees

Karen Gibbs

Hi Karen, how can I avoid paying banking fees that eat into my savings?

-Donna, Baltimore, MD

Credit Cards in a Wallet

Thanks for your question, Donna.  The average household spends $290 annually on banking fees which, to some, can be quite a bit of money.  There are ways to minimize, if not avoid altogether, fees that financial institutions charge.

First off, make sure you are aware of all the terms and conditions in your banking agreement.  Somewhere in the fine print, most institutions outline what fees they charge and when.

One of the easiest ways to avoid a minimum balance charge, a fee incurred if your balance falls below a certain level, is to have your paycheck deposited directly to your financial institution.  Most banks will waive the minimum balance fee if you enroll in direct deposit.  If you don’t use direct deposit and your average monthly balance is less than $500, you can expect to see an average of $12 charged to your account monthly for maintenance fees.

The average overdraft charge is $35 per transaction, so it’s smart thinking about your money to know your current balance, balance your checkbook after each transaction and link your accounts just in case you do spend more money than you have in your account.

The average charge for a bounced check is $30.  Be careful about cashing a check from someone else, especially if you don’t know who wrote the check or the institution that issued the check.  If you cash a third party check and it bounces, you are liable for the amount of the transaction as well as the bounced check charge.

One of the top consumer complaints about banking is fees associated with using an ATM (automated teller machine).  Again, somewhere in the fine print, the financial institution will tell you how much they will charge for an “out-of-network” ATM transaction.  Out of network ATM is an ATM not associated with the issuing financial institution.  Average out of network fees are $4.52 cents per transaction and are usually split between your financial institution and the ATM network used.

To avoid ATM fees, always use an ATM associated with your financial institution.  Ask your financial institution if it reimburses ATM fees.  If not, try to limit your ATM withdrawals.  It may help you stick to your budget as well as save you money.

You can also use your debit card for purchases and use the “cash back” feature.  Most debit card transactions don’t charge a fee for cash back, but double check that you won’t be charged before you sign your name.

Financial institutions can also charge a fee for lost cards, foreign exchange transactions, and charge for hard copies of cancelled checks.  Add to that annual credit card fees which average $58/yr. and it’s easy to see how can lose as much as $300 a year to banking fees.

A little research and a bit of planning ahead will help you keep more money in your pocket and pay out less to your financial institution. 


Shop around for the best deal and good luck!

 - Karen

No comments.
Enter verification code: Captcha not loaded