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Savings account fees, explained

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    Savings accounts are generally useful tools for saving money, like when you’re preparing for a major purchase. They encourage you to save, often paying interest on your balance at regular intervals. There are some costs to consider when factoring in the overall benefits - namely, routine savings account fees. Let’s explore how common savings account fees work and ways you might be able to avoid them.

    Do savings accounts have fees?

    Do savings accounts have monthly fees? Yes, savings accounts generally come with fees, some of them monthly. There can also be various other fees related to certain transactions and specific features of certain savings accounts. Referring to the terms and conditions of your savings account can help clarify the potential fees associated with your specific account.

    Common fees on savings accounts

    Here are some of the fees on savings accounts you may expect to see and why banks charge them:

    • Monthly maintenance fees: Some financial institutions charge routine monthly fees to cover the administrative costs of maintaining your account. The fee amount generally varies, sometimes based on the type of savings account or the scope of services provided. Some banks may offer ways to avoid these fees, such as by maintaining a certain minimum balance, setting up a recurring direct deposit or by signing up for other bank services.
    • Minimum balance fees: Some savings accounts may come with minimum balance fees designed to encourage you to maintain a certain amount on deposit. Different banks calculate your balance differently; some may charge you after your balance stays below the minimum threshold for a certain time while others may calculate it based on your average monthly balance.
    • Excess transaction fees: Savings accounts may have a monthly limit on certain types of transactions, particularly savings withdrawals. If there is a withdrawal limit, exceeding it may subject you to excess transaction fees. These limits are typically used to discourage frequent transfers, helping to both maintain balances for the bank and promote more saving.
    • ATM usage fees: These are typically charged for using ATMs outside your bank’s network. This fee may be higher for international transaction fees. Apart from using in-network ATMs to avoid these fees, some banks may offer accounts that reimburse a certain number of out-of-network ATM fees per month. This may be especially helpful for frequent travelers.
    • Inactivity fees: Some banks may charge inactivity fees on savings accounts that have failed to make any deposits or withdrawals over a certain period. Depending on the account or bank, this fee may be waivable if you have another active account with them. You may want to regularly review your accounts and consolidate inactive accounts to avoid unintentionally accruing such fees on savings accounts you aren’t actively using.

    Reference your account agreement for fees specific to your savings account or talk with your bank/financial institution.

    Why do banks charge fees on savings accounts?

    Some banks charge fees on savings accounts primarily to cover operational costs, comply with reserve requirements, manage financial risks and maintain profitability. These fees contribute to the bank’s ability to provide financial products and services to its customers. Make sure to reference your account agreement or speak to your banking institution for fees specific to the account. Let’s look in-depth at where many of the fees on savings accounts are used:

    • Operational costs: One of the main reasons some banks charge fees on savings accounts is to cover the costs of running the bank. This includes things like maintaining the physical branches, employing staff and providing online banking services.
    • Reserve requirements: Some federal regulations have historically required banks to keep a certain percentage of depositors’ money in reserve. These requirements ensure that they have sufficient funds available for customer withdrawals; savings account fees help support the costs associated with reserve requirements.
    • Profitability and services: Beyond covering costs, savings account fees contribute to a bank’s profitability. This profit is what supports the financial institution and enables it to offer and improve services for its customers. This includes everything from expanded product offerings to investments in more advanced security.

    In summary

    With savings accounts, there may be certain savings account fees to consider. Some fees on savings accounts are used to help support the financial institution’s operations, while others are designed to encourage saving and financial management. Staying aware of the fees associated with your savings account may help you prevent unanticipated charges.

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