So-called “maintenance fees” are difficult to avoid, while overdraft penalties can be quite high and hidden expenses like foreign transaction charges can end up being an unwelcome surprise. And then, of course, there are ATM surcharges.
On occasion, you will simply have to pay a fee because you have no other option. Most of the time, however, you can take steps to avoid these unwelcome banking expenses.
Do you need overdraft protection?
If you have had more than one overdraft recently, overdraft protection might be a good idea. Most banks allow customers to purchase insurance for their checking account. For a few dollars per month (usually around $5), people can avoid getting hit with overdraft penalties, even if they spend more money than they have in their account.
However, if you are careful with your budget and your debit card usage, such insurance will not be necessary.
When unforeseen expenses come up (and they always do), you can apply for an online personal loan. These loans will help you cover your unexpected costs without having to spend more money than you have in the bank.
When do banks waive maintenance fees
Banks will often allow checking account customers to avoid maintenance fees if they meet certain requirements. These vary from bank to bank, but here are the two most common ways to escape these extra costs:
- Many banks will waive maintenance fees for customers who set up a direct deposit. This means that their employer deposits their paychecks directly into their bank account.
- Some banks will not charge a maintenance fee to any customer who keeps their balance above a certain minimum amount. The amount varies from bank to bank, so you should always ask about these balance requirements before opening a new account.
Because of costs associated with currency exchange and the greater possibility of fraud, some banks charge extra fees to those who make purchases outside of Canada, either online from international vendors or while traveling abroad.
One option for avoiding these charges is to get a credit card that does not levy such fees and then make your international purchases with it instead of with your bank-issued debit card.
Some banks charge customers every time they use their card to get cash out of an ATM. Most banks will allow their customers to make withdrawals from the ATMs that they manage for free.
So instead of withdrawing a few dollars when you need it, you should get as much as you will need for the week (or longer if possible) when you are at a fee-free ATM that is operated by your bank.
Online-only banks are more likely to offer fee-free banking. Some may still have direct-deposit or minimum balance requirements, but most do not have maintenance fees or ATM fees because they have lower overhead cost. (They do not have to pay to operate brick-and-mortar locations).
These ideas can help you avoid most, if not all, bank fees.