Understanding monthly maintenance fees (and how to keep more of your money)

If you're like most people, you've got a checking account that you use to deposit your paychecks and pay bills. And hopefully, you've also got a savings account where you sock away a little here and a little there. 

It's common for checking and savings accounts to have monthly maintenance fees. Lots of banks charge them. 

Do you need to pay them? Not necessarily. We've got some tips to help you avoid bank fees and challenge yourself to save more.

What is a monthly maintenance fee?

A monthly maintenance fee is a fee some banks charge to have an account with them. The fees that you and other customers pay go to cover the bank's day-to-day expenses. 

How do you know if your bank charges a monthly maintenance fee?

Banks are required by federal law to tell you what fees you'll pay before you open a new account. That includes monthly maintenance fees and other fees, like overdraft fees. 

Fees are usually listed in your deposit account agreement or in a separate fee schedule that's attached to the agreement. Your bank should give you one or both of these documents when you open a new account online or at a branch. 

So why should you care about monthly maintenance fees? Simply because they cost you money. 

Every dollar you pay to the bank in monthly fees is a dollar that you can't add to your emergency fund or use to pay down debt. And when you have big or small financial goals you are working towards, every dollar counts. 

Why do banks charge monthly maintenance fees?

Banks charge monthly maintenance fees and other fees to cover their overhead costs and make money. Any extra money from fees that isn't needed to pay the bank's expenses goes on its balance sheet as profit. 

That's a big incentive for banks to charge fees. The types of accounts that most often have monthly fees include:

• Personal checking accounts

• Personal savings accounts

• Money market savings accounts

• Business checking and savings accounts

You might also pay other fees for these accounts, like overdraft fees, returned item fees, wire transfer fees, and foreign ATM transaction fees. In terms of cost between monthly maintenance fees vs. overdraft fees, overdraft fees tend to be higher. 

Certificate of deposit (CD) accounts usually don't have monthly fees, since you're expected to leave your money in them for a set term. But you could still pay an early withdrawal fee if you take money out of your CD before the term ends. 

Bottom line? All those fees are sneaky budget killers that are best avoided as often as possible. 

How to avoid monthly maintenance fees

If your bank charges a monthly maintenance fee, you might have one or more ways to avoid it. Here are some of the most common ways to waive a monthly maintenance fee. 

1. Maintain a minimum balance. Your bank might waive the monthly fee if you keep a certain amount of money in your account each day. For example, you might need to keep $500 or $1,000 in your account on average. If you can't meet a minimum balance requirement, you could try some of the other tips on this list to avoid a monthly fee. 

2. Enroll in direct deposit. Direct deposit allows you to get paid electronically. You could set up direct deposit for your paychecks, for example, so the money goes straight to your bank account every payday. Banks may waive monthly fees if you have a minimum direct deposit that recurs each month.

3. Open multiple accounts. Some banks will waive monthly maintenance fees if you have more than one account and meet a minimum balance requirement. For example, you might be able to get out of a fee if you have both a checking and savings account at the same bank, and maintain an average balance of $1,500 combined. 

4. Use your debit card. Your bank may waive the monthly fee if you use your debit card for a minimum number of transactions each month. Eligible transactions can include bill payments, point-of-sale purchases, or cash withdrawals from ATMs.

5. Enroll in electronic statements. More banks offer e-statements vs. paper statements, and you may get a break on monthly fees if you opt to go paperless. 

Of course, the best way to avoid monthly maintenance fees is to keep your money at a bank that doesn't charge them. 

Best places to find low monthly maintenance fees

Are there alternatives to banks with high fees? Absolutely, and you've got plenty of options to choose from. 

Here are three possibilities to consider if you need a bank account but want to ditch the steep fees. 

• Credit unions. Credit unions are membership organizations, and when you join one you own a small slice of it. Credit unions can offer checking accounts and savings accounts, and some of them don't charge a monthly fee for either one. Other credit union benefits could include higher rates on savings accounts or access to credit builder loans. 

• Online-only banks. Online-only banks offer digital banking, with no physical branches. That means they have lower overhead costs, which lets them pass on savings to customers in the form of fewer fees. 

• App-based banks. App-based banks let you bank through your mobile device, often with no monthly maintenance fees. Banking apps may also offer access to savings features or tools that you can use to expand your financial know-how. 

Wherever you decide to bank to avoid monthly fees, make sure it's an insured institution. The FDIC protects the money in personal bank accounts in the extremely rare chance that the bank fails. The NCUA does the same for personal credit union accounts.

What to do if you've already been charged

You've logged in to online banking to check your balance, and what do you see? A monthly fee. 

You might assume you can't do anything about it, but think again. If you've been hit with a fee, here's what to do next. 

• Ask for a refund. If you've been with your current bank for a while and have been a good customer, you could call the bank and ask for a fee refund. The bank might be agreeable to a one-time waiver if you're a loyal customer. If you need a tip on how to get bank fees refunded, play up your account history, and if that doesn't work, tell the bank you might take your business elsewhere. 

• Switch accounts. If you're worried about more fees in the future, you could switch to an account that doesn't charge a monthly fee. You could ask your current bank what options you have if you want to stay where you are before you look for fee-free checking accounts or savings accounts elsewhere. (Hint: Online bank accounts are usually the way to go.)

• Plan for the future. Should you decide to stick with your current bank, ask yourself what you can do to avoid the fee from here on out. For example, could you bump up the amount you keep in your account or set up a direct deposit? The more buffers you can create, the easier it might be to avoid a fee. 

Are bank fees a pain? Sure. But do you have to hand over your money to the bank blindly? No!

Monthly maintenance fees are avoidable if you know these tips and tricks. Once you find a free bank account, link it to the MoLO app to find even more opportunities to save each month.