Bank fees around the U.S. climb to record highs

The fee banks charge for withdrawing cash from the ATM keeps climbing. For an out-of-network machine, the average cost is now $4.72 — that's a record, according to a new Bankrate.com survey. That amount includes $3.09 charged by the ATM's owner and $1.63 charged by your bank for going outside their system.

If your bank account dips into the red, expect to pay several times that amount. Overdraft fees rose to an average of $33.36, pennies short of their all-time high of $33.38 in 2017.

The good news? Overdraft fees are avoidable. Banks are required to get a customer's permission to charge an overdraft on a one-time debit card or ATM transaction, said Lauren Saunders, associate director of the National Consumer Law Center. According to Saunders, most consumers don't want to pay overdraft fees.

"If you don't have enough money in your account for a cup of coffee, most people don't want to pay $40 for that cup of coffee — they'd rather that transaction get denied," she said.

But because overdrafts are so profitable for banks, they're extremely persuasive in getting customers to sign up for coverage, Saunders added.

Though overdraft fees are steep, they're not the most common type of bank fee. That dubious distinction goes to monthly account maintenance fees, according to Greg McBride, Bankrate's chief financial analyst. Sometimes called an account fee, this is a monthly charge for keeping some money at a bank. In 2018, banks made nearly $36 billion in account maintenance fees, according to the Federal Deposit Insurance Corporation.

And now that the Fed is lowering interest rates, which affects how much profit banks can make on loans, banks are likely to try adding or raising their fees, McBride said.

"What we have seen in years past is the biggest [fee] increases came in years when interest rates were really low and interest margins were under pressure," he said. "We are going to have to be on the lookout for … a faster pace of fee increases now that interest rates are falling."

While average bank fees are increasing, Bankrate also found plenty of fee-free accounts out there.

"If you're paying fees, look at what other accounts your bank offers," McBride advised. "They might have an account that is free with direct deposit. ... And if you need to pack up and go somewhere else, do it."

Customers prone to overdrafts should consider connecting their checking account to a savings account or a credit card, Saunders said. Both options typically charge a fee or, in the case of a credit card, interest — but they're often cheaper than overdraft fees. 

She also advised setting up account alerts to alert you when an account balance drops below a certain amount. And, if you might be short on cash, don't wait until an overdraft to look at a loan. 
 
"If you need to borrow money, you're much better off getting something that's an honest credit product, like a credit card or loan," Saunders said. "Overdraft are really just a predatory credit product."