The term "bank fee" refers to any fees made by financial institutions to their customers, both business and personal, for account setup, maintenance, and other small-scale transactions. The fees can be imposed on a single or continuous basis. Examples of bank fees vary from account maintenance costs, transfer and withdrawal fees, automated ATM fees, the non-sufficient fund (NSF) charges, late payment fees, and many more.
Understanding Bank Fees
Banks charge fees for services they offer to their private and commercial customers, which seem to appear all over. For example, banks may charge customers fees to keep certain accounts open. In other instances, they could charge service charges to perform transactions or to pay penalties for things such as bounced checks. Certain fees apply to all customers; however, others could be waived under specific conditions. Customers with long-term relationships and have multiple assets and obligations with a particular bank could be eligible for a fee-freeze.
Every financial institution must be open about its bank charges. There is a complete list of fees on banks' websites and in the small printed pamphlets. The customers must read and go through the disclosures to avoid being surprised. Although competition is a natural regulator of the places, banks can charge fees and the amount it believes they can manage Government authorities like CFPB and OCC are standing ready to handle complaints and questions from the public regarding fees charged by banks.
Fees are displayed on the customer's bank statement, paper passbooks, and the bank's website banking portal. In the majority of cases, banks will announce charges at the time that the transaction is completed. For other situations, like charges for maintaining a bank account, the bank will typically add them towards the close of each month.
Although most financial institutions' total income comes from net interest earnings, A significant portion of the revenue is derived from bank charges. The individual fees might be minimal; however, they are quite significant when they are added together. If you consider that the interest rate net of banks is squeezed during the context of low-interest rates, Bank fees can provide an element of security to the bank's profits.
It is crucial for consumers to be aware of the amount they spend on bank fees and, if feasible, how to stay clear of these costs since they could add up. The average monthly cost for fees for maintaining a checking account within the United States amounted to $14.13 or $169.56 for the year, according to Money Rates. This is the most expensive amount ever that the site has surveyed in the last seven years. Be aware that this number doesn't take into account charges for overdrafts, withdrawal and transfer fees, charges for using the ATM, and many more. To limit the amount you pay in fees, you need to ensure that your monthly minimum balances are maintained, limit the number of withdrawals, avoid bounced checks, and make payments on time with your credit card.
Types of Bank Fees
Minimum account balance fees
Some banks require their customers to maintain a minimum balance each month. If the balance drops below the minimum amount, even for a few hours--the customer will be charged an amount at the end of the month.
Transfer and withdrawal fees
Many accounts permit customers to perform a set amount of transactions per month. For example, a checking account could allow the owner to make at least ten monthly transactions or withdrawals. The bank could charge a fee to service any additional withdrawals that occur after. Customers with savings accounts can take at least six free withdrawals each month, and after that, they are charged for each withdrawal that follows. Other forms of fees in this category are wire transfer charges.
These charges could be assessed when customers take excessive withdrawals from ATMs or if they utilize machines that are not part of the bank's network. These charges are typically taken out after the transaction has been completed rather than at the closing each month.
The bank reverses if a client doesn't have enough money to pay the entire transaction amount. In the process, the client is charged the NSF charge.
If customers are dwindling to zero or less, their account will be charged an overdraft cost. In some instances, banks may charge interest on an average overdraft balance as it's usually regarded as a loan for a short duration.
Late payment fees
Companies and banks charge cardholders for late payments when they fail to pay by the due date in their statement.