In this article, we will cover common types of bank fees, why you get them, how to avoid them, how to negotiate them.
It’s important to know how to properly optimize your accounts or you’ll end up paying fees bank charges that can easily be avoided.
One of the biggest secrets to avoiding fees and properly using your account is talking to an actual customer service rep, either in person or on the phone.
Yes, nerds, you might actually have to pick up the phone. For some reason, half of my friends are afraid of talking to people on the phone.
I have a friend who recently lost his bank password and, for security reasons, had to call the bank to prove who he was. He turned into a Stockholm syndrome victim in front of my eyes, muttering, “It’s not that important. They’re right. I’ll just wait until I go into the bank” over and over. He didn’t get his password for four months! What the hell is wrong with people?
You may not like to talk on the phone, but most of the special deals I’ll show you how to get require talking to someone in person or on the phone.
Maybe I’m too demanding, but if I’m lending a bank my money to re-lend out, I don’t believe I should have to pay them additional fees.
Think about it: If your Big Bank charges you a $5 monthly fee, that basically wipes out any interest you earn. This is why I’m fanatical about my savings and checking accounts having no fees of any kind, including monthly fees, charges, overdraft fees, or setup fees.
If you already have an account at a bank you like but they are charging a monthly fee, try to get them to waive it. They will often do this if you set up direct deposit, which lets your employer deposit your paycheck directly into your account every month.
Banks will also try to trick you by demanding “minimums,” which refer to minimum amounts you must have in your account to avoid fees or to get “free” services like bill pay. These are BS. Imagine if a bank required you to keep $1,000 sitting in its low-interest checking account. You could be earning twenty times that much by investing it.
If you can’t do direct deposit because your job doesn’t offer it or if you can’t get the bank to waive a “minimum,” I strongly recommend that you switch to an online high-interest account that has no fees and no minimums.
Note: Certain charges are okay—for example, when it comes to services like money orders and reordering checks. Please don’t run into your bank screaming, “BUT RAMIT TOLD ME NO FEES!!!!” when you’re trying to order more checks. If you do, though, send me the video on Instagram or Twitter (@ramit).
Say you realize your current checking account charges you fees and you want to switch. When you call, they tell you they can’t offer a no-fee account. Are you going to accept that? Hell no. Go on offense. Here’s what to say.
YOU: Hi. I noticed that my current checking account has fees. I’d like my account to have no annual fees, free checking, and no minimum balance, please.
BANK REP: I’m really sorry, but we don’t offer that kind of account anymore.
YOU: Really? That’s interesting, because [competitor] is offering me that exact deal right now. Could you check again and tell me which comparable accounts you offer?
(Eighty percent of the time, you’ll get a great account at this point. If not, ask for a supervisor.)
SUPERVISOR: Hi, how can I help you?
YOU: (Repeat argument from the beginning. If the supervisor doesn’t give you an option, add this:) Look, I’ve been a customer for X years, and I want to find a way to make this work. Plus, I know that your customer-acquisition cost runs hundreds of dollars. What can you do to help me stay a customer?
SUPERVISOR: What an astounding coincidence. My computer is suddenly allowing me to offer the exact account you asked for!
YOU: Why, thank you, kind sir. (Sip Darjeeling tea.)
The bank has already spent a lot of money to land you as a customer and doesn’t want to lose you over something as small as a $5 monthly fee. Use this knowledge as leverage whenever you contact any financial company.
The most painful and expensive fees are usually overdraft fees—which is the fee your bank charges you if you don’t have enough money in your checking account to cover a purchase. Of course, the best way to avoid overdraft fees is to not let them happen in the first place. Set up automatic transfers and keep a cash cushion in your account (I keep about $1,000 in my checking at all times).
But mistakes do happen. Most banks understand that people are occasionally forgetful, and they’ll waive a first-time fee if you ask. After the first time, it gets harder, but can still be done if you have a good excuse. Remember: They want to keep you as their customer. A well-executed phone call can often make a difference. But when calling, keep in mind that you should have a clear goal (to get your fee erased) and should not make it easy for companies to say no to you.
Here’s how I negotiated my way out of a $20 overdraft fee and a $27.10 finance charge from Wells Fargo (back when I had an account there).
I had transferred money from my savings account to my checking account to cover a temporary shortage, and the transfer arrived one day late. I saw the overdraft fee, sighed, and called the bank to get it waived.
RAMIT: Hi. I just saw this bank charge for overdrafting, and I’d like to have it waived.
BANK REP: I see that fee . . . hmm . . . Let me just see here. Unfortunately, sir, we’re not able to waive that fee. It was [some BS excuse about how it’s not waivable].
Bad things to say here:
“Are you sure?”
Don’t make it easy for the rep to say no to your request.
“Is there anything else I can do?”
Again, imagine if you were a customer service rep and someone said this. It would make your life easier to just say no. As a customer, don’t make it easy for companies to say no.
“Well, this Indian author told me I could. Have you read his book? It’s called I Will Teach You to Be Rich, and I love it because . . .”
Nobody cares. But it would be cool if a thousand customers called their banks and said this.
Don’t give up here. It’s easy to walk away, but there’s a better way.
Try this instead:
RAMIT: Well, I see the fee here, and I’d really like to get it waived. What else can you do to help me? (Repeat your complaint and ask them how to constructively fix it.)
At this point, about 85 percent of people will get their fees refunded. I have hundreds of comments from people on my blog who have taken this advice and saved thousands of dollars in fees. But in case the rep is obstinate, here’s what you can do.
BANK REP: I’m sorry, sir, we can’t refund that fee.
RAMIT: I understand it’s difficult, but take a look at my history. I’ve been a customer for more than three years, and I’d like to keep the relationship going. Now, I’d like to get this waived—it was a mistake, and it won’t happen again. What can you do to help?
BANK REP: Hmm, one second, please. I see that you’re a really good customer . . . I’m going to check with my supervisor. Can you hold for a second?
(Being a long-term customer increases your value to them, which is one reason you want to pick a bank you can stick with for the long term. And the fact that you didn’t back down at the first “no” makes you different from 99 percent of other customers.)
BANK REP: Sir, I was able to check with my supervisor and waive the fee. Is there anything else I can help you with today?
That’s all I had to do! This doesn’t just work for overdraft fees—it can also work for certain processing fees, late fees, and even ATM fees. I learned this lesson the hard way. I lived in New York for a summer when I was doing an internship. I decided not to open a bank account while I was there, because it would take time and I was lazy. So I just used those ATMs left and right and ate the $3 charges ($1.50 from my bank, $1.50 from the ATM) each time.
Now I feel dumb, because I just talked to a friend who recently moved to New York for a few months. She didn’t want to open a bank account for such a short time either, but instead of just shrugging and saying, “Oh, well,” she actually called her bank. She just asked them if they would waive the ATM fees while she was there. “No problem,” they said. She saved more than $250 just by making a phone call!
Remember, with a customer-acquisition cost of more than $100, banks want to keep you as their customer. So use this information to your advantage and make the call next time you see any fees levied on your account.
While many bank fees are ridiculous, I find that they are quite willing to wipe them for a good customer. I bounced a check because I stupidly wrote a check out of the wrong account. I’d been a customer for about five years, and I simply walked into the bank and asked them to waive it. They did it right there on the spot. I didn’t have to do any convincing or anything.—ADAM FERGUSON, 22
Common bank account fees:
5 common banking fees:
Banks charge fees to make profit in their business. Bank fees allow financial institutions to make back their money it costs to operate. Banks also make money on loans interest.
Not all banks charge a monthly maintenance fee but many do. Banks will tack on many different types of fees including monthly fees, overdraft fees, and setup fees. It’s part of how they make profit.
Bank charges are money to pay to your bank, for a number of different reasons, including if you overdraft your account, have insufficient funds, or setup a new account with your bank. There are a few different reasons you may have a bank charge. Contact your bank asap to find out the reason for it.
Just call your bank. You could waive the fee if you keep a minimum daily balance or an over the course of the month. Some types of accounts let you waive the charge if you make a minimum number of purchases with your debit card each month. Other times you need to pick up the phone and call your bank to find out why you got charged and to get it fixed.
Account holders can negotiate out of monthly fees by opening both a checking and a savings account at the same bank or by maintaining a minimum balance in the account. Sometimes, setting up a monthly direct deposit is enough to waive the monthly fee. Other times, you’ll need to talk with your bank directly to find ways to avoid paying the fees.