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Ask the expert: Making sense of checking account fees

January 11, 2011

By Richard Barrington | MoneyRates.com Senior Financial Analyst, CFA

Q: I'm confused about checking account fees. Whenever I try shopping for a new bank, I'm hit with a baffling list of potential fees. There seem to be different types of charges at every bank, which makes it hard to do an apples-to-apples comparison. What should I focus on when trying to compare bank fees?

A: It's no accident that bank fee schedules can be confusing. Most banks don't want to make it easy to do head-to-head cost comparisons, and of course, those fee schedules are always written so as to reserve the bank's right to change their fees in the future. Still, here are three major categories of checking account fees to focus on:

  • Monthly maintenance fees. These are the most important fees because they occur automatically every month, but if you shop around, you should be able to find a free checking account in your area.
  • Overdraft fees. Comparing overdraft fees is useful, but what's even better is opting out of overdraft programs altogether.
  • ATM fees. Don't just look at the fees--look at a bank's ATM locations so you can assess how often you'd incur a fee for having to use another bank's machines.

Beyond that, there are several fees for specific things like wire transfers, and some banks are starting to charge for paper statements. If you have some banking history, it may be helpful to look at the type of fees you would have incurred in the past, based on your banking habits. For example, some people overdraft their accounts more often than others, some are heavier ATM users, etc. Also, some banks will waive certain fees if you maintain a balance above a certain threshold.

To sort this out, look at fees you've incurred recently, and see whether a potential new bank's fee schedule would have been any easier on you, based on your usage patterns.

Got a financial question about saving, investing, or banking? MoneyRates.com invites you to submit your questions to our "Ask the Expert" feature. Just go to the MoneyRates.com home page and look for the "Ask the Expert" box on the lower left.

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