Buzz
In the first year of having my Chase checking account, I was being charged $25 monthly because I didn't meet their required average daily balance. The solution was a quick 5-minute phone call where I asked if I could switch to a checking account with a lower balance threshold.
“If you do that, you'll miss out on the interest,” the helpful representative warned me over the phone.
“But I’m paying $25 a month just for you to hold my money, and you’re giving me about a penny back,” I explained. It was probably something she was obligated to say, and she promptly switched my account to the less expensive, interest-free option. Since then, I’ve avoided any maintenance fees. It was an expensive lesson for me, and I felt pretty foolish.
The point I’m trying to make is that life’s too short to be paying bank fees—minimum balance fees, ATM charges, NSF fees, overdraft penalties, all of them. There are so many ways to avoid them, and if you're being charged, it's time to move your money somewhere else. You’ve got plenty of choices.
Digital-Only Banks
I stayed with Chase because of the convenience in New York, and my roommate at the time also had Chase, making it simple to send her rent money via Chase Pay. As you’ve probably guessed, I’m a bit lazy. I still occasionally get hit with two fees for using sketchy bodega ATMs that I could avoid by finding a bank-branded machine. But these fees are easy to avoid.
If you’re frustrated enough with your traditional bank to make the leap, online banks like Ally and Bank of the Internet (yes, that’s a real bank) provide free checking accounts with a tiny bit of interest, plus access to the Allpoint ATM network or reimbursement for ATM fees (usually up to a set number of times per month).
The downside to online banks is that you won’t have the option to visit a branch and speak with someone face-to-face. For some, that’s a deal-breaker, but for others, it’s not an issue. If you’re in the latter group, you’ve got another great option.
Credit Unions
Credit unions are fantastic. Everyone should become a member of one. These institutions are nonprofit, member-owned organizations, each with its own criteria for membership based on factors like location, religion, and more. However, there are many credit unions open to people from anywhere, typically for the cost of a one-time donation.
Kiplinger offers a helpful list of credit unions that anyone can join. One that stood out during my past research is Lake Michigan Credit Union, which provides a checking account with a 3% APY and up to $15 in monthly ATM reimbursements. If you don’t reside in Michigan, all you need to open an account is a $5 donation to the ALS Foundation.
There are numerous good options out there. You can locate a credit union that suits your needs with this search tool.
No matter which one you pick, be mindful of potential overdraft fees.
The final piece to consider is the overdraft fee. The average fee now sits around $35, and some banks may charge multiple overdraft fees each day if you make several transactions.
Every bank and credit union has its own rules for overdrafts. For instance, Bank of the Internet doesn't charge overdraft fees; they simply decline the transaction. Other alternative banks like Simple and Chime also don’t charge these fees. Online-only banks and credit unions tend to charge, on average, $9 less for overdrafts compared to national and regional banks, according to NerdWallet.
To avoid an overdraft fee, if your bank charges one, don’t opt into overdraft protection. Without it, your debit card or ATM transaction will be declined if you don’t have sufficient funds in your account. You won’t be able to complete your purchase, but you also won’t incur the $25 to $35 fee. Opting into coverage lets you complete the transaction, but you’ll face an additional $35 charge.
Some financial institutions offer free transfers from a linked savings account, while others provide an overdraft line of credit with a low interest rate (you only pay minimal interest on the overdrawn amount). Also, if your bank offers text alerts for balance notifications, it's a great tool to keep track of your account and prevent overdrafts.
It all comes down to research. You shouldn't be paying a bank simply to hold your money. We all deserve more than that.
