Alternate name: Account disclosures
Understanding the fees a bank charges makes it easier for you to shop around and find the account that’s right for you.
How a Bank Account Schedule of Fees Works
When you open a new checking or savings account, the bank is required to give you a schedule of fees that explains all potential charges. For example, online banks have less overhead, so they usually charge fewer fees than traditional banks with physical branches. You’ll see these differences when you compare a schedule of fees from each type of bank. The schedule of fees should also include explanations of how you can avoid certain fees. For example, you may be able to avoid certain fees by maintaining a minimum monthly balance in your checking account. You may also avoid ATM fees by only using ATMs in the bank’s network.
Types of Bank Fees
It’s important to understand some of the standard fees banks charge and how you can avoid them. By understanding your options, it’ll be easier to find the best account for you.
Overdraft Fees
If you don’t have enough money in your bank account to cover a check or debit transaction, the bank may allow the charge to go through and charge you an overdraft fee. Overdraft fees can cost as much as $35 per transaction, and these fees can quickly add up. According to the Consumer Financial Protection Bureau (CFPB), overdraft fees can hurt consumers with fewer financial resources by making it harder for them to catch up on their finances and cover other expenses. A CFPB study found that individuals who pay more than 10 overdraft fees in a year account for almost three-quarters of all overdraft fees.
Minimum Balance Fees
Depending on the type of account you open, your bank may require you to maintain a minimum monthly balance. If you can’t maintain this balance, your bank will charge a minimum balance fee.
Maintenance Fees
Your bank may charge a monthly fee, known as a maintenance fee, to service and maintain the account. Some banks allow you to avoid this fee by setting up a direct deposit to your account.
ATM Fees
If you use an out-of-network ATM, you may get hit with an ATM fee. To avoid this fee, it’s best to only use in-network ATMs. You can also look for banks that offer accounts that refund these fees to you.
Why a Bank Schedule of Fees Is Required
Disclosures such as bank account schedules of fees are required by the Truth in Savings Act. This law went into effect in 1993 and was designed to help consumers make more informed decisions when opening a bank account. Part of it, Regulation DD, requires that banks provide consumers with disclosures about any terms and fees that come with their accounts. The Truth in Savings Act applies to depository institutions that offer deposit accounts to consumers in any state. Credit unions are also subject to truth in savings provisions, but under a different regulation. The National Credit Union Association publishes Trust in Savings Part 707, which is substantially similar to Regulation DD. All these account disclosures make it easier for customers to compare the fees, interest rates, and terms offered by multiple banks. You’re entitled to receive a disclosure anytime you open a new account, receive a statement, request a new copy of the schedule of fees, or if the bank changes its terms.
