The 5 worst bank account fees — and how to avoid them easily

Random checking account fees can suck the life out of your budget, consuming a decent amount of your hard-earned cash like a ravenous gremlin.

All bank products have the potential to stick it to you with fees, but the most egregious fee-producing offender of all financial products is the checking account, which routinely smacks customers with out-of-network ATM charges, maintenance fees and more.

"You should never have to pay checking account fees," Greg McBride, senior vice president at Bankrate, said in an interview. "Fees are completely avoidable, but you need to know what to do in order to not get hit."

A recent Bankrate study found that out-of-network ATM fees — often two separate charges: one from your financial institution and one from the third-party machine operator — add up to an average of $4.57 per withdrawal.

Seriously?

To protect your cash, the Consumer Financial Protection Bureau suggests closely tracking your transactions, avoid spending more than you have (obviously) and knowing where those irritating fees originate — but you can do more.

Beyond being hyper-focused on your balance (because, frankly, who has time to do that?) here are five ghastly fees — and easy ways to kill them for good.

1. The overdraft trap

Opting in for "overdraft protection" sounds good because it lets that overdrawn transaction go through — and the word "protection" sounds great, right?

Wrong. That protection will actually cost you an average of $33.04 per overdraft. 

"Link your savings to your checking account," McBride suggested. "So if you come up short in checking you have the cash in savings to cover the transaction."

Even better?

Call your bank and — politely — negotiate to have the overdraft charge removed. Point out that you are a first-time offender and then ask if you can opt out of the "protection."

Next time you hit your account limit, your purchase just won't go through — which, since your balance can't cover the cost, is probably for the best.

2. The out-of-network ATM fee

Just because that out-of-network ATM is located inside your favorite pub doesn’t mean it's the best source every time you need cash.

"Download your financial institution’s app and look for the closest in-network ATM," McBride said. "You may have to walk a few short blocks, but it will be worth the fee savings."

One expert tip?

For the extremely lazy bodega ATM aficionado, there are banks out there that not only charge nothing — but will reimburse all third-party fees incurred using an out-of-network machine. So consider switching banks.

3. The price of loyalty

This one sounds a little abstract, but it can be seriously costly.

Your financial institution may try to convince you that you will save money by doing all your banking with them; don’t fall for it.

While you can receive favorable rates and fee waivers for bundling products, according to McBride, your best bet is to shop around for each product. 

"You’ll have more luck going with the financial institution that provides the best deal, McBride said. "Even if you have your auto loan with one provider and your checking and savings at different banks, you can still link them electronically so it won’t be a headache."

Look carefully. You might even want to go à la carte and set up a savings account at one bank and a checking account at another.

4. The maintenance charge

According to McBride, 38% of banks and 76% of credit unions offer a free, standalone checking account.

So if you find you are paying a "monthly maintenance" charge, it's time to break up with your bank and go elsewhere.

Before you pull the plug: "Ask if using direct deposit for your paycheck will eliminate the fee," McBride noted. "This will most likely do the trick."

5. The fine print fees

As boring and tedious as it sounds to read disclosures, make sure you are truly getting a free account.

For example, the CFPB previously took M&T Bank to court for falsely advertising its checking account line as being free with "no strings attached" — when that was not the case.

If you ever get slapped with an unexpected charge, call your bank and complain. And be ready to walk.

But dump your bank the smart way: Be sure you take necessary steps to close the account before you move on, so you aren’t dinged with — you guessed it — inactivity fees.

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