Still paying monthly maintenance fees? Discover ways to reduce those fees or avoid them altogether so you keep more of your money.
A monthly maintenance fee, or monthly service fee, is a fee that banks charge to maintain your account. Think of it as a subscription fee you pay, but instead of streaming your favorite show, you get to keep your money in a safe place.
These fees are often charged on savings and checking accounts, but luckily banks provide their customers with a way out of paying those fees. (And some banks don’t charge fees at all.)
What Is a Monthly Maintenance Fee?
Whether your bank is brick-and-mortar or purely internet-based, it has overheads. These overheads are usually paid for by revenue which is generated by interest charged on credit products such as mortgages, car loans, personal loans, and credit cards. But there’s also a lucrative income stream called fees.
Bank accounts that aren’t used or are misused are costly for a bank and increase its risk. To mitigate this risk, banks levy an account fee to cover those costs.This fee is a monthly maintenance fee. However, accounts that are in-use feed the bank’s book in other ways—for instance, transaction charges such as transfer costs.
How to Avoid Monthly Maintenance Fees
Banks are keenly aware that customers don’t enjoy paying fees. So in order to appease customers, banks may offer a product that has a single monthly maintenance fee that covers all transactions. Another way to soften the blow is by enabling customers to "earn" the waiving of the fee through account conduct or product range.
Banks such as Bank of America and Chase allow customers to bypass the monthly maintenance fee by maintaining a minimum balance.
However, some of the smaller, local banks might not have this fee waiver as standard.Therefore, you may have to request the fee to be waived manually. While this might seem daunting, a quick conversation could save you a couple of dollars a month.
Simply ask to waive the fee. If there is pushback, gently remind the consultant that you’re a good customer with an excellent track record with their bank. For example, you could argue that you've been with them for several years and that the other products on their book far exceed the maintenance fee they’re charging on your account. If you’re not successful, ask to speak to someone more senior and repeat your request.
Selecting a Bank with a Maintenance Fee Mindset
While it’s easy enough to assume that a bank that offers accounts with no maintenance fees is the best option, this isn’t always the case. That’s because the total bank offering should be considered when opting to open an account.
What to Look For
A bank that charges a maintenance fee may have certain features that make it an attractive option. But it’s always best to weigh out your options and see which bank may best help you meet your financial goals.
Things to consider when choosing a bank that charges these fees include:
• The option to waive the fee through account performance. This could include maintaining a minimum balance, having certain products with the bank, or even doing a certain number of transitions within a set period.
• Access to a wide network of products. If all the bank has to offer is an account with a maintenance fee, it’s time to look around. There are plenty of online-only banks with limited products that don’t charge maintenance fees. To sweeten the deal, some might even offer to pay interest on positive balances in your checking account.
• Flexible fees on credit products. You might be able to offset the cost of the checking or savings account by saving on credit products such as credit cards, personal loans, auto loans, or mortgages.
• Banks who let you in on the fees from the start. There are few things as disconcerting as discovering sneaky account fees that you didn’t know existed when you signed up for the product.
• Reputation. It’s time to check out reviews. Customers may find it acceptable to pay a little bit more if they’re guaranteed good service.
• Value adds. Customers are a little more inclined to pay for specialized services such as private or VIP banking if it allows them certain benefits or access to unique products. And cash back rewards is always a plus.
Who Typically Has Monthly Maintenance Fees and Who Doesn’t?
Brick-and-mortar institutions are far more likely to have monthly maintenance costs due to the infrastructure costs of keeping branches open, such as Wells Fargo, Bank of America, and Chase.
Online banks such as Ally Bank and Synchrony don’t have all the financial outlay and can service customers on a purely digital platform. This means they can carry over those savings to their customers and not charge the monthly maintenance fee, irrespective of account conduct or balance.
Bankrate recently released their 2021 top checking accounts, and here’s how a few of them compare.
1. Quontic: Offers 1.01% on positive balances, and customers are required to maintain a minimum balance of $100. There is no fee if the minimum balance isn’t met, and there are no monthly maintenance fees.
2. Capital One: Requires a minimum balance to open of only one dollar and offers 0.10% on positive balances. There is no fee if the minimum balance isn’t maintained, and there are no monthly account fees.
3. Bank of America: A minimum of $100 is required to open the account, and the bank pays 0.01% on positive balances. The monthly maintenance fee on the account is $25, and to avoid this fee, customers are required to maintain a minimum balance of $10,000.
Other banks on the list include Wells Fargo, Chase, Lending Club, CIT Bank, and more.
With an app like Monorail, there’s no minimum deposit, no minimum balance, and the features you need to save for wishlist items and short-term goals. And with real, human customer service, the Monorail app could be a good option for those who may struggle with the pros and cons of online banks.
The Bottom Line
To choose the right bank account and avoid maintenance fees, you will need a holistic approach to your personal financial needs. Will you be able to meet the minimum balance requirements that some banks request? Would an online bank help you meet your long-term goals?
There are three elements to get the most out of your money: plan, save, and do. With Monorail, you can do all three and not lose sleep over exorbitant fees. See how Monorail banking can help you take control of your money goals.
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