Understanding the cost of your bank account

Having money in the bank can come with multiple expenses — ATM fees, overdraft fees, service fees, late fees and more. While each one on their own might not seem like much, they add up over time. Luckily, by managing your account well and choosing your financial institutions carefully, you can avoid many bank fees.

Why banks charge monthly and annual fees

Some banks and credit card companies charge monthly or yearly service fees. Fees for checking or savings accounts tend to be monthly, while credit cards sometimes charge yearly fees. These fees are to cover the costs to maintain your accounts and are often used to offset the costs of perks like cash back on spending or no fees for using ATMs outside the bank's network. Weighing the perks against any fees your bank charges can help you decide if the account is right for you.

Overdraft and NSF fees explained

When you make a purchase, payment or withdrawal from your checking or savings account that’s more than you have in your account, and the bank covers the transaction for you, you'll have a negative account balance resulting in an overdraft. When that happens, your bank may charge an overdraft fee for covering the amount. If the bank rejects your transaction because you don't have enough money in the account to cover it, you may be charged a non-sufficient funds, or NSF, fee.

USAA Federal Savings Bank offers ways to help customers avoid overdraft fees.

How credit card fees are different

Credit cards may charge yearly fees, but there are also other costs you might end up paying. If you carry a balance on your credit card past the grace period, you'll end up paying interest at your credit card's interest rate, which can vary by type of card and provider. If you miss a payment, you could be charged a late fee.

If you use your credit card for a balance transfer or cash advance, you could accrue immediate finance charges without a grace period or pay fees sometimes around 3% to 5% of the amount of each transaction. Read your credit card's terms and conditions to determine what fees you might pay.

Other deposit account fees

In addition to monthly, yearly and overdraft fees, your checking and savings accounts might accrue other charges. Here are a few common ones:

Minimum account balance fees

Some bank accounts require customers to maintain a minimum balance each month. If the balance drops below that amount — in some cases, even just for a day — the customer may pay a fee.

ATM fees

You could be charged an ATM fee if you use an ATM outside your bank's network. You might even be faced with two ATM charges per transaction, one from your bank and one from the owner of the ATM you used.

Fees for bounced or stopped checks

If you write a check and there isn't enough money in your account to cover it, you might be charged a bounced check or NSF fee. To stop payment on a check or other transaction, such as a recurring ACH debit, before it's processed, you might have to pay a stop payment fee.

How to avoid bank fees

All financial institutions are required to disclose any fees they may charge. Be sure to read any disclosure statements on your bank statements or account pamphlets to avoid any surprise fees.

By doing a little research, you can usually find checking accounts that don't charge annual or monthly fees. That’s the case for USAA Classic Checking. Some banks might have a requirement to waive the monthly fee for checking accounts, but it must receive at least one direct deposit per month. Most institutions will charge some type of fee for things like overdraft or NSF even if they don't charge you a monthly fee for having the account.

You may also find credit cards that don’t charge annual fees. USAA Federal Savings Bank has a few of these credit card options.

ATM fees can also be an account drainer depending on how many times you hit the ATM up for cash. But you can usually minimize that fees by using in-network ATMs. You can find USAA Federal Savings Bank preferred ATM locations on the mobile app and on our website. Often, the savings is worth a little extra effort or travel time.

But while you can take steps to minimize fees, only careful managing of your account will help avoid all fees.