A bank fee is a very simple concept: it’s the money we pay banks for the services they provide us. Why do we pay them? For new credit cards, ATM withdrawals, bank account maintenance and other services. Here’s all you need to know about the many kinds of bank fees, how and when to pay them, and how to avoid overcharges.
What’s a bank fee?
It’s money we pay a bank for providing or arranging services like issuing a credit card, sending a transfer or exchanging foreign currency, due to transaction expenses.
How are bank fees paid and how often?
The fees customers pay can depend on the bank, the service, terms and conditions and local legislation. Fees can be charged for a one-off service, such as an international transfer (a transaction you can learn a lot more about with these tips from Santander Consumer Spain). Transfer fees can be either fixed or a percentage to pay the bank for moving money from one country to another and converting currency. There are also flat-rate fees, in which all bank fees are charged at once.
As users of banking services and products, we should know that banks set most fees freely. National laws and authorities only restrict some fees. Rules on termination and repayment fees for consumer credit and mortgages exist in several countries and can be regulated by law. Bank fees are usually supervised by competent national authorities.
By law, financial institutions can change fees unilaterally within the terms of the product agreement. Still, they must notify customers in advance in a period that can vary by country.
Banks must also provide users with detailed fee information for each service they provide at branch offices, online and at pertinent government agencies. Users should also understand their products’ terms and conditions, which is essential to their day-to-day financial wellness.
Types of bank fees
Common fees are :
Tips to avoid overcharges
To avoid paying more bank fees than necessary, you should:
How are a bank fee and a bank expense different?
On the one hand, a bank fee is the price banks charge for the services they offer. On the other hand, a bank expense is the cost banks must pay third parties for transactions required to provide such services (e.g., delivery charges and valuation fees).