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Understanding and Avoiding Common Savings Account Fees

Savings account fees can differ significantly between financial institutions. Ideally, you want to avoid these fees altogether, and in some cases, that is possible. By understanding how these fees work, you can sidestep these unwelcome expenses. Here’s a breakdown of seven common savings account fees and how to avoid them.

1. Monthly Maintenance Fee

This fee is charged by banks or credit unions to keep your savings account active. It is typically deducted from your account each month. Monthly maintenance fees are more common among institutions with physical locations and usually range from $5 to $8, but can be as high as $25 for high-yield savings accounts.

How to Avoid It

You can often avoid this fee by:

• Maintaining a minimum account balance
• Having a linked checking account at the same bank
• Setting up automatic monthly transfers from a linked account

2. Stop Payment Fee

If you need to cancel a scheduled payment from your savings account, you may incur a stop payment fee, which is usually around $30.

How to Avoid It

Ensure you have sufficient funds in your savings account to cover upcoming transfers. Checking accounts are generally better for paying bills, but maintaining a strong monthly budget can help you manage your finances effectively.

3. Returned Item Fee

If a check you deposit into your savings account bounces, you may be charged a returned item fee, typically ranging from $5 to $19.

How to Avoid It

Only accept checks and ACH transfers from trusted sources to minimize the risk of returned items.

4. Wire Transfer Fee

Wire transfers allow you to electronically move funds in and out of your savings account. Fees can range from $0 to $50, with international transfers usually costing more.

How to Avoid It

Consider using platforms like Zelle, Venmo, or PayPal for free transfers. For large amounts, a certified check can be a cost-effective option.

5. Inactivity Fee

If your savings account remains unused for a while, you may be charged an inactivity fee, typically around $5 to $20.

How to Avoid It

Set up automatic transfers to your savings account each month or use it to pay a recurring bill to avoid inactivity fees.

6. Overdraft Fee

If you initiate a transfer without sufficient funds, your bank may cover the transaction and charge an overdraft fee, generally about $30 per transaction.

How to Avoid It

Budgeting can help ensure you have enough money in your account. Overdraft protection, which pulls money from a linked account, can also be helpful.

7. Nonsufficient Funds Fee

If you can’t cover a transaction, it may be canceled, and you could be charged a nonsufficient funds fee, averaging $34.

How to Avoid It

Ensure your savings account is adequately funded, especially if it’s used for important payments like your mortgage.

How to Avoid Savings Account Fees

Every savings account is different, but here are a few general tips to avoid fees:

• Choose a savings account without certain fees, such as online savings accounts.
• Maintain a sufficient balance to avoid fees related to stopped payments, returned items, overdrafts, and nonsufficient funds.
• Meet your bank’s monthly requirements, such as maintaining a minimum balance or having a linked checking account.

The Bottom Line

Savings account fees can be a nuisance, but understanding them can help you avoid them. Maintaining a strong savings account is crucial for financial wellness. Aim to save three to six months’ worth of expenses in your emergency fund. Avoiding fees can help you reach this goal faster.

For any mortgage-related needs, call O1ne Mortgage at 213-732-3074. We’re here to help you navigate your financial journey with confidence.

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