The whole point of a savings account is to save money, right? And yet, financial institutions can be remarkably underhanded when it comes to how they make money through this often-overlooked product. In fact, the tendency to neglect our savings accounts is exactly what banks count on when it comes to assessing fees. We may even keep an eagle eye on our checking account balance, but how often do we really check those savings account statements? Answering personally, I can safely say, almost never.
Recently I linked my checking and savings accounts and activated my online banking…all for the purpose of being able to check up on what my bank is doing with my accounts when they think I’m not looking. I also did some research so I would know exactly what to look for when it comes to my savings account. Here’s what I discovered about the most commonly overlooked fee charges banks assess against savings account holders—I hope this research helps you too!
1. Inactivity fees
An inactivity fee (also called a dormancy fee) is just as it sounds—a penalty for failing to do anything with your account within a certain period of time. So if you have the thought that you’ll just tuck that savings account money away for a rainy day, be sure you read the fine print first. Time periods may be just a few months or as many as a few years. But once the fees hit, if you don't pay attention they may just keep accruing.
2. Overactivity fees
Oh yes, banks reserve the right to penalize savings account holders for over- as well as under-activity. “Overactivity” can include everything from making too many deposits to making too many withdrawals. Account holders may be assessed a flat fee or a per-incident fee.
3. Maintenance fees
You may think savings accounts are low maintenance on the account-type totem pole, but banks are quite happy to pass through their maintenance fees to the customer—especially if you aren't paying attention!
4. Minimum balance fees
Not all savings accounts have a minimum balance requirement attached to them, but if yours does and you don't maintain it, you’ll be charged. Charges will likely accrue monthly until you bring the balance up to minimum again. You may also be charged an annual fee if you maintain a low balance in your savings account over time.
5. Declining interest rates
While technically this isn’t a fee, you should watch out for it just the same because it can have a similar effect. Sometimes banks lure customers in by offering a high interest rate just for new customers who open a savings account. However, the fine print may tell another tale of what happens when the introductory period ends. Be sure you know what you’re getting long term before going to the trouble of opening a savings account.
6. No interest earned
Typically, savings accounts accrue interest either daily or monthly. But a U.S. News & World Report article cautions customers to watch out for small print stating that banks have the right to stop interest or accrual—or interest earned—if an account falls inactive or below a minimum balance.