Understanding the cost of your bank account

Having money in the bank can be expensive — ATM fees, overdraft fees, service fees, late fees and more. The average American pays about $7 a month in banking fees.^{See note1} While that might not seem like much, it adds 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 often are 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 is 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, NSF fee.

USAA Federal Savings Bank offers several tools that can help customers avoid account overdrafts, including overdraft protection. To enroll, change or cancel overdraft protection, contact a representative at 800-531-USAA (8722), or log onto the USAA Mobile app or usaa.com.

See the Deposit Agreement and Disclosures for details about this service.

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, 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 pay fees, sometimes around 3% 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 or yearly fees 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 or your bank statements or account pamphlets to avoid any surprise fees.

By doing a little research, you can usually find credit cards or checking accounts that don't charge an annual or monthly fees. For example, some banks waive the monthly fee for checking accounts that receive at least one direct deposit per month.

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

The USAA Advice Center provides general advice, tools and resources to guide your journey. Content may mention products, features or services that USAA Federal Savings Bank does not offer. The information contained is provided for informational purposes only and is not intended to represent any endorsement, expressed or implied, by USAA or any affiliates. All information provided is subject to change without notice.