In this article, we’ll look at bank fees, why you get them, how to avoid them, and how to negotiate them.
It’s important to know how to properly optimize your accounts, otherwise you’ll end up paying fees and bank charges that can easily be avoided.
One of the biggest secrets to avoiding fees and using your account properly is to speak with a real customer service representative in person or on the phone.
Don’t Run Away From Your Bank Fees (Fix Them)
Yes, nerds, you really will have to pick up the phone. For some reason, half of my friends are afraid of talking to people on the phone.
I have a friend who recently lost his bank password and had to call the bank to prove who he was for security reasons. He turned into a victim of Stockholm syndrome before my eyes, muttering. “It’s not that important. They are correct. I’ll just wait until I go to the bank” over and over again. He hadn’t received his password in four months. What the hell is wrong with people?
You may not like talking on the phone, but for most special deals I’ll show you how to ask to speak to someone in person or on the phone.
Avoiding monthly bank fees
Maybe I’m being too picky, but if I’m lending to a bank to re-borrow my money, I don’t think I should be paying them extra fees.
Think about it. If your Big Bank charges you a $5 monthly fee, that basically wipes out the interest you earn. This is why I’m a fanatic that my savings and checking accounts have no fees of any kind, including monthly fees, charges, overdraft fees, or set-up fees.
If you already have an account with a bank you like, but they charge a monthly fee, try to get them to drop it. They will often do this if you set up direct deposit, which allows your employer to deposit your paycheck directly into your account each month.
Banks will also try to trick you by asking for “minimums,” which refer to the minimum amount of money you need to have in your account to avoid fees or to get “free” services like bill paying. These are B.S. Imagine if a bank asked you to keep $1,000 in their low-interest checking account. You can earn twenty times more by investing it.
If you can’t do direct deposit because your job doesn’t offer it, or if you can’t get the bank to waive the “minimum,” I strongly recommend switching to an online high-interest account that has no fees and no minimums.
Note: Some charges are normal, for example when it comes to services like money orders and check cashing. Please don’t run into your bank screaming. when trying to order more checks. If so, however, send me the video on Instagram or Twitter (@ramit:)
How to cancel your bank charges
Say you realize your current checking account is charging you fees and you want to switch. When you call they say they can’t offer a free account. Are you going to take it? Let the writer take it, no. Go on offense. Here’s what to say.
YOU Greetings! I noticed that my current checking account has charges. I would like my account to have no annual fees, free checking and minimum balance please.
WITH THE BANK. I’m really sorry, but we no longer offer this account.
YOU Really? It’s interesting because [competitor] is offering me that very deal right now. Can you check again and tell me which comparable accounts you offer?
(Eighty percent of the time, you’ll get a great score at this point. If not, ask for a supervisor.)
Supervisor: Hello, how may I help you?
YOU (Repeat the argument from the beginning. If the boss doesn’t give you an option, add this.) Look, I’ve been a customer for X years, and I want to find a way to make this thing work. Also, I know your customer acquisition cost is hundreds of dollars. What can you do to help me stay a customer?
Supervisor: What an amazing coincidence! My computer suddenly allows me to offer the exact account you requested.
YOU Why, thank you, good sir. (Drink Darjeeling tea.)
The bank has already spent a lot of money to get you as a customer and doesn’t want to lose you over something as small as a $5 monthly fee. Use this knowledge as leverage when contacting any financial company.
Almost all bank charges are negotiable
The most painful and expensive fees are usually overdraft fees, which is the fee your bank charges you if you don’t have enough money in your checking account to cover the purchase. Of course, the best way to avoid overdraft fees is to prevent them from happening in the first place. Set up automatic transfers and keep a cash cushion in your account (I keep about $1,000 in my checking account at all times).
But mistakes happen. Most banks understand that people are sometimes forgetful and will refuse to pay the first time if you ask. It gets harder after the first time, but can still be done if you have a good excuse. Remember: they want to keep you as their customer. A well-placed phone call can often make a difference. But when you call, remember that you should have a clear goal (to clear your fee) and not make it easy for companies to say no to you.
Here’s how I negotiated a $20 overdraft fee and a $27.10 finance fee from Wells Fargo (when I had an account there).
I had transferred money from my savings account to my checking account to cover a temporary shortfall and the transfer was a day late. I saw the overdraft fee, sighed and called the bank to waive it.
RAMIT: Greetings! I just saw this bank charge for an overdraft and I would like it to be cancelled.
WITH THE BANK. I see that charge. . . hmm . . Let me just see here. Unfortunately, sir, we cannot waive that fee. It happened [some BS excuse about how it’s not waivable].
Bad things to say here.
“Are you sure?”
Don’t make it easy for the representative to say no to your request.
“Is there anything else I can do?”
Imagine again if you were a customer service representative and someone said this. It would make your life easier to just say no. As a customer, don’t make it easy for companies to say no.
“Well, this Indian author told me I could. Have you read his book? It’s called I’ll Teach You to Be Rich, and I love it because . . “.
Nobody cares. But it would be good if a thousand customers called their bank and said this.
Don’t give up here. Quitting is easy, but there’s a better way.
Try this instead.
RAMIT: Well, I see the charge here, and I’d really like to waive it. What else can you do to help me? (Restate your complaint and ask them how to address it constructively.)
At this point, about 85 percent of people will have their fees refunded. I have hundreds of comments on my blog from people who have taken this advice and saved thousands of dollars in fees. But if the rep is stubborn, here’s what you can do.
WITH THE BANK. Sorry sir, we cannot refund that fee.
RAMIT: I understand it’s hard, but look at my story. I have been a customer for over three years and would like to maintain the relationship. Now I would like to withdraw from this matter, it was a mistake and it will not happen again. What can you do to help?
WITH THE BANK. Hmm, just a second, please. I see you are a really good customer. . . I’m going to check with my boss. Can you hold on for a second?
(Being a long-term customer increases your value to them, which is one reason you want to choose a bank you can stick with long-term. And the fact that you didn’t back down at the first no makes you different from 99 percent of other customers).
WITH THE BANK. Sir, I was able to check with my supervisor and waive the fee. Is there anything else I can help you with today?
That’s all I had to do. This doesn’t just work for overdraft fees, it can also work for certain processing fees, late fees and even ATM fees. I learned this lesson the hard way. I lived in New York for a summer while doing an internship. I decided not to open a bank account while I was there, because it would take time and I was very hungry. So I just used those ATMs left and right and ate the $3 fees each time ($1.50 from my bank, $1.50 from the ATM).
Now I feel like a fool because I just talked to a friend who recently moved to New York for a few months. He also didn’t want to open a bank account on such short notice, but instead of just shrugging and saying “oh well” he actually called his bank. He just asked if they would give up the ATM while he was there. “No problem,” they said. He saved over $250 just by calling.
Remember, the cost of customer acquisition is more than $100, banks want to keep you as their customer. So use this information to your advantage and call the next time you see a fee being charged to your account.
While many bank charges are funny i think that they are enough ready to delete them good for the customer. In: he jumped to check because I stupidly wrote a check wrong account. I would like was a customer for about five years and me just walked in bank and asked them give it up. They did it right there on the spot. I didn’t have to do anything persuasive or something.
— ADAM FERGUSON, 22
Frequently asked questions about bank fees and bank charges
What are typical bank fees?
General bank account fees.
- Monthly maintenance fee.
- Setup Fee
- Overdraft fee.
- Non Sufficient Funds (NSF) Fee.
- ATM fee.
- Paper statement fee.
- Minimum balance fee
- Foreign transaction fee.
- Account closing fee.
What are the 5 types of bank charges?
5 general bank charges.
- Monthly account/service/maintenance fee.
- Out-of-network ATM fee.
- Excessive transaction fees.
- Overdraft fee.
- Insufficient Fund/Minimum Balance Fee.
Why do banks charge fees?
Banks charge fees to make a profit in their business. Bank charges allow financial institutions to recover the money they spend working on. Banks also make money on loans and interest.
Do all banks have a monthly fee?
Not all banks charge a monthly service fee, but many do. Banks will charge many different types of fees, including monthly fees, overdraft fees and setup fees. It’s part of how they make a profit.
What are bank charges in simple terms?
Bank charges are money you have to pay to your bank for a number of different reasons, including if you overdraft your account, don’t have enough funds, or open a new account with your bank. There are several different reasons why you may have a bank charge. Contact your bank as soon as possible to find out why.