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Savings Account Fees: What You Need to Know
Savings account fees can differ significantly between financial institutions. Ideally, you want to avoid these fees altogether, and in some cases, that is possible. Understanding how these fees work can help you steer clear of 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 can range from $5 to $8, but high-yield savings accounts can charge up to $25 per month.
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, usually around $30. This fee applies when you notify the bank at least three days before the scheduled payment date.
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 than domestic ones.
How to Avoid It
Consider using free platforms like Zelle, Venmo, or PayPal for sending and receiving money. 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, usually 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 monthly bill to avoid inactivity fees.
6. Overdraft Fee
If you initiate a transfer without sufficient funds, your bank may cover the transaction, triggering 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 you use it for regular 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 hassle, 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.
At O1ne Mortgage, we are committed to helping you achieve your financial goals. For any mortgage service needs, call us at 213-732-3074. We are here to assist you!
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