Feb 22, 2023

Back to The Banking Basics: What The F**s (Fees)

Arc Team

Go-To-Market

Banks, like used-car salesmen, love their hidden fees. Fees for opening an account, fees for closing an account, fees for sending and receiving money, and fees for simply having an account, it’s ridiculous. Banks should have your back, instead, they only pad their own pockets. We’re here to help, in the article below you’ll find a breakdown of the most common fees: what they are, what they’re for, and what the average charge is. Hopefully, by the end, you’ll come to the conclusion that most of the founders we talk to have: a fee-free bank is the way to go—let’s dive in!

Why do banks charge fees?

Let’s be honest, banks charge fees simply because they can. Are there real costs for some of the services they offer? Yes. But are those costs 1:1 for what they charge you? Absolutely not. The basic bank fees associated with deposit accounts are like the cherry on top of a sundae—they cover the bonuses of all the top bankers and help fund new corporate offices. Sure, banks are businesses and they need to make money, but that doesn’t mean they need to nickel and dime depositors every time they turn around.

Do all banks charge fees?

No, not all banks charge fees. Traditional banks are typically the ones that have fees, Fintechs do not. These fees can range from a few cents for basic items, like deposits, to hundreds of dollars for researching items on your behalf. Large banks rely on these fees for their top and bottom line.

What are the most common types of bank fees?

Bank fees come in many forms, the most common types can be broken down into three categories: maintenance fees, usage fees, and management fees.

Maintenance fees are charged by the bank for simply having an account. These are like the annual fee you pay for airline credit cards.
Usage fees are charged when you actually make a transaction using the account. These are like the fees for pulling money out of an ATM.
Management fees are charged for helping you manage your funds across various accounts. These are like the fees you pay to your 401k provider for managing investments on your behalf.

What are the most common maintenance fees from banks?

As mentioned above, maintenance fees are charged simply for having an account. We’ve broken down the most common maintenance fees below.

Account opening fees: fees charged by banks for simply opening an account with them. These are not typically associated with opening checking or savings accounts, but rather loans, and are known as “origination fees”. These are not usually flat fees, instead, they are quoted as a percentage of the outstanding balance.
Account closing fees: as the name suggests, these fees are charged by a bank for closing an account. Typically these fees only apply if an account is closed shortly after it is opened (<90 days). Account closing fees range from $25 - $99 depending on the account type.
Information service fees: these are non-negotiable fees charged by banks for simply providing access to a representative who can assist you with issues and answer questions. Traditional banks charge startups $50 - 100 per month for providing access to these services.
Minimum balance fees: fees charged by banks if you fail to maintain a certain balance in your account. These fees can range from as low as $25 per month to as high as $99 per month, again depending on the type of bank account you have.
Monthly maintenance fees: fees that banks impose for simply having an account with them. These fees can range from as low as $25 per month to as high as $500 per month, depending on the type of bank account you have.
Paper statement fees: as the name suggests, these are fees charged by banks for accounts that request paper statements outlining the transactions of a particular period, they range from $10-25 per month.
Research fees: these are fees charged by banks in tandem with information service fees for finding answers to your questions. Example: “In the event that questions arise requiring personnel time or expense, to answer or otherwise respond, you will be charged $50 per hour, with a minimum charge of one hour.” These research fees range from $25 - 100/hr, and usually have a one-hour minimum.

What are the most common usage fees for banks?

As mentioned above, usage fees apply when you actually use your bank account. We’ve broken down the most common usage fees below.

ACH fees: fees charges imposed by banks for transferring money from one account to another account at a different bank using an ACH. These fees can range from as low as $5 to as high as $50 per transfer. More information on ACH.
ATM fees: these are fees for making withdrawals from, and checking your balance on out-of-network ATMs, they range from $2.50 - $7.50 per transaction.
Bill pay fees: these are fees for scheduled automatic payments for rent, utilities, credit card payments, and more. These range from $10 - $50 per month.
Branch transfer fees: these are fees charged by banks for changing your primary branch location and thus your account representative, they range from $3 to $25 per transfer.
Cashiers check fees: as the name suggests, these are fees for issuing a cashier's check, which is drawn from the bank's own funds, not yours, and signed by a cashier or teller, thus guaranteeing the availability of funds. These range from $10 - $25 each.
Check copy fees: as the name implies, these are fees for getting a copy of a physical check, Note: these are often requested for canceled checks. These range from $5 - 10 each.
Checks paid image transmission fees: these are fees charged for the ability to view digital copies of checks you’ve written and others have deposited. The images are sent via an encrypted electronic service or are housed in your online portal. This service ranges from $25 - $100 per month.
Debit card replacement fees: as the name suggests, these are fees for ordering a new physical debit card in the event that it's lost, stolen or worn out, replacements range from $5 - $10 each.
Deposit fees: these are fees charged by banks for depositing funds at a physical branch. They range from $1.50 to $5 per deposit, along with a $0.17 - $1 charge for each check, and a $0.30 to $0.50 charge for every $100 in cash deposited over a monthly limit (usually $5000 - $10,000).
Foreign exchange service fees: these are fees charged when you make a purchase that either passes through a foreign bank or is in a currency other than the U.S. dollar, they typically range from $5 to $25 for each transaction.
Manual account transfers: these are fees charged when you transfer funds from your bank to another bank, mutual fund, credit union, insurance company, or limited partnership that does not participate in ACATS. These fees range from $10 - $25 each.
Missing deposit slip fee: this is a fee charged if you deposit funds into a physical branch without filling out a deposit slip, it ranges from $5 - 10 per deposit slip.
Money order fees: fees for printing a check that is issued by you, and purchased at a branch (similar to a cashier's check), it is typically $5 - $20 per check.
Night depository fee: this is a fee charged for making a deposit outside of the traditional bank hours, e.g. dropping off checks/cash into a secure overnight depository box, it typically ranges from $10 - $50 per deposit.
Overdraft fees: fees imposed by banks when you make purchases for or withdraw more money than you have in your account, they range from as low as $5 to as high as $50 per overdraft.
Returned deposited item fees: fees charged for depositing a check that was previously returned due to insufficient funds or stop payment, it ranges from $15 - $25 each.
RTP fees: fees charged by banks for transferring money from one account to another account at a different bank using RTP provider. These fees can range from as low as $5 to as high as $25 each. More information on RTP.
Stop payments fees: fees charged by banks for “stopping” or withholding payment on a check that you wrote, they range from $5 - $15 each.
Transaction fees: fees charged by banks for making more transactions in the account than the monthly limit. The typical limit is 20 transactions per month, with a charge of $0.10 - $0.50 per transaction thereafter. The qualifying transactions may include electronic deposits and deposited items, ACH transfers, wire transfers, RTP payments, ATM transactions, debit card purchases, withdrawals, internal transfers, and more.
Wire fees: fees charged by banks for transferring money from one account to another account at a different bank using a wire transfer. These fees can range from as low as $25 to as high as $100 each. More information on wires.

What are the most common bank management fees charged by banks?

Banks charge monthly management fees for helping startups manage their cash balance across their operating accounts and investment accounts. Typically there is no management fee for checking, savings, or money market accounts, but there are management fees for money market funds and treasury management accounts.

These fees can be structured as a fixed monthly cost, or as a fixed percentage of assets (more common). Most banks and Fintechs charge between twenty-five and fifty basis points (0.25 - 0.50%) to manage and automatically sweep funds between these accounts. Funds swept into money market funds purchase ETFs that hold Treasury bills, government and municipal bonds, and other fixed-income assets. The management fees come off the top of the returns (yield) generated by the investments and are usually unavoidable.

Where to find the fees your bank charges?

Typically charges appear on your monthly statement, they’re also usually outlined in a “schedule of fees” document. Here are links to a few of the fees from the larger traditional banks:

How to reduce or completely avoid common bank fees?

There are a few ways to reduce your monthly banking fees. You could:

Enroll in accounts that waive your fees
Select accounts without monthly maintenance fees
Sign up for paperless statements
Reach out to your bank representative and negotiate fees

Or you could avoid all those headaches and sign up for an account that doesn’t have any fees in the first place, like the hundreds of founders that opened an account with Arc.

Final thoughts on bank fees

If you couldn’t tell, we’re not fans of bank fees—it’s why we don’t charge any for our accounts. While a few dollars here or there may not seem like much, over the course of a month they can add up to thousands if not even tens of thousands of dollars. Banks already make money using your money, don’t let them nickel and dime your startup to death. Instead, consider getting a fee-free account that it’s in your best interests, like Arc.