If an account has been inactive over a certain period of time, the state controls what the bank is allowed to do with the money, and the bank can no longer levy fees from the account. Not only do such inactive accounts cause administrative headaches for banks, but also they can be costly for them. Banks levy inactivity fees on accounts that have gone dormant to help spur account holders to become active again so as to avoid having to deal with the regulations governing inactive accounts.
Banks may start charging inactivity fees after the account has been completely inactive for at least six months, although some banks wait up to a year to charge this fee.
You may or may not receive advance notice that the bank will start charging the monthly fee. Generally, inactivity fees are a result of letting an account slip through the cracks. Moving to a new area or switching banks can sometimes leave an account behind that you simply have not gotten around to switching.
If you wish to keep such an account open, setting up a recurring deposit or payment can help you maintain the minimum activity to avoid the fee. Otherwise, closing the account and moving the money to an account that you are more likely to keep track of will be the best way to protect yourself from inactivity fees. While bank fees will never disappear completely, you have the power to avoid the majority of account fees that come your way.
Good banking habits like planning ahead for when you need cash, keeping an eye on your balance and regularly checking on your account online, all can help you prevent fee-triggering mistakes. Emily Guy Birken is a former educator, lifelong money nerd, and a Plutus Award-winning freelance writer who specializes in the scientific research behind irrational money behaviors.
Her background in education allows her to make complex financial topics relatable and easily understood by the layperson. Select Region. United States. United Kingdom. Emily Guy Birken. Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but that doesn't affect our editors' opinions or evaluations.
Here are five common bank fees and how you can avoid paying them. Maintenance Fees Monthly maintenance fees can be an irritating aspect of modern banking. Avoiding These Fees Many banks that charge monthly maintenance specify that the fee will be waived each month the consumer meets certain guidelines.
These may include: Maintaining a minimum daily balance in the account Setting up a recurring direct deposit Using the associated debit card a minimum number of times per month Knowing exactly what minimums and requirements are in place to receive this monthly waiver can help you to structure your financial life to avoid the fee. Overdraft Fees Overdrawing your account is the kind of mistake that anyone can make.
Avoiding These Fees Since , it has been illegal for banks to charge overdraft fees without customer consent. This will help you maintain a minimum balance required for your account and prevent overdrafts. Instead of being declined for a purchase when you don't have enough money in your bank account, the bank will cover you by taking the funds from your linked savings account, second checking account, line of credit, etc.
For those who don't opt for overdraft protection, having insufficient funds can cost you when you try to make a purchase. These fees, as well as bounced check fees, can be avoided by keeping an eye on your account and transferring money into your account in advance. To make it easy, sign up for notifications so that you are automatically alerted by text or email when your balance is low.
This way, you can rest assured that your funds will cover you. Wire transfers may be a quick way to transfer money without using physical cash, but they cost you for the convenience. Use wire transfers sparingly unless it's an official transaction that requires a big amount of money. Otherwise, you can transfer funds online or through your bank's mobile app. Closing your account too early has its repercussions.
Check what your bank's rules are before you move forward with canceling your account. Share Close share. Save Close save Added to My Priorities. Many banks charge fees for maintaining checking or savings accounts. Try low-balance alerts to prevent overdrafting. Close Disclaimer The material provided on this website is for informational use only and is not intended for financial, tax or investment advice.
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