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Should I deposit more to avoid a statement fee?

January 13, 2015

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

savings account rate

Q: After 10 years with the same bank, my bank is threatening to charge me $5 a month to continue to receive paper statements. I might understand if this were a checking account, but it is a savings account with virtually no activity. I can avoid the fee if I bring the balance up to $10,000. I have $10,000 available, but I hate to feel like I'm being extorted to deposit more money with them. Am I being unreasonable?

A: Your feelings are perfectly understandable. No one likes to suddenly be charged for something they are accustomed to getting for free. With that said, it is important to respond rationally rather than emotionally. The situation you describe is occurring more and more these days, and it is a function of the business dynamics of the banking industry. Just as they make a business decision about what kind of new fees to charge, you need to make a business decision about how your banking needs can be best met.

The important thing is that you should avoid paying that fee. That $5 monthly fee will cost you $60 a year, and given how low interest on savings accounts is these days, that fee could wipe out most if not all of your annual interest. With that in mind, here are some options to consider:

  1. See if the bank offers a paperless option. Some banks that charge a fee for paper statements also offer the option of getting statements online for no fee. Even if you like to have a hard copy of your banking records, that can be easily accomplished if you have a printer at home.
  2. Meet the minimum balance requirement if the interest rate is competitive. You could deposit enough money to meet the $10,000 threshold for waiving the fee, but you should do this only if that money is going to be earning a competitive interest rate at your bank. Otherwise, you may be avoiding the fee but costing yourself interest.
  3. Shop around. If your bank's interest rates are not competitive enough to justify an additional deposit, start shopping for a new bank. It is likely that you can kill two birds with one stone, by both avoiding the statement fee and finding a higher savings account rate.

People often remain with the same bank simply out of inertia. However, one thing that can trigger a change is a new fee policy, so you should look at this as an opportunity to review and potentially upgrade your banking situation. You may find that you can not only avoid that new $5 fee, but also improve your interest rate.

Got a question about savings, investing or banking? MoneyRates.com invites you to submit your questions to its "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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