Savings account fees to know about

The content of this article is provided for informational purposes only. You should always obtain your own independent, tax, financial, and legal advice before making any material decision.

A savings account is a bank account where money can be stored. Many are free to hold, but banks sometimes charge fees for managing savings accounts and transactions. And some of those fees may be unexpected or hidden.

This article will cover the types of fees charged on savings accounts and offer suggestions on ways to help avoid them.

Do savings accounts charge fees?

Most savings accounts in the UK are fee-free, but this may depend on the bank, the type of account, or the account’s usage. Here's more:

• Type of Account. Some savings accounts may entail monthly maintenance fees or a minimum balance.

• Usage Fees. Fees may also apply for excessive withdrawals. That’s because most savings accounts might be intended for fewer transactions than current accounts.

Although they might be less common than current account fees, fees on savings accounts do exist. And they may vary significantly across British banks and account types.

Savings account fees and common charges

Here are some of the different types of fees associated with savings accounts.

• Monthly maintenance fees. Some accounts charge a fee if the balance falls below a minimum amount. Banks may claim, in their terms and conditions, that this is to cover administrative costs.

• Withdrawal fees. Limits are often placed on the number of free withdrawals per month, with certain banks charging fees for exceeding these limits.

• Fund transfer fees. Charges may apply when transferring funds to an external account or for international bank transfers.

• Dormant account fees. Savers who do not use their account for an extended period may incur fees to maintain the account on the bank’s books.

• Paper statements. Opting for paper statements may attract a fee, too. Usually, this can be avoided by switching to digital-only statements.

And here’s another charge to watch out for: Some savings accounts may withhold interest payments if the balance doesn't grow by a minimum monthly amount.

How to help avoid fees on savings accounts

Banks may update their savings account offers, benefits, and terms frequently, so it’s a good idea to consider several banks when planning to open a savings account (or move an existing one). And there might be actions savers can take to avoid fees, such as:

• Budgeting to meet minimum balance thresholds and to help avoid maintenance fees

• Planning withdrawals ahead of time to try to stay within the allowed limits

• Choosing digital communication to help avoid paper statement fees

What to do if your bank charges a savings account

Savers may need to query bank charges on their savings accounts. The following options may help:

• Review account terms. Checking account terms and conditions may can lead to a better understanding of the bank's fee structure and criteria for any charges.

• Examine transactions. Reviewing the transaction history may can help pinpoint any activity that may have triggered an unexpected fee.

• Contact bank support. If concerns remain, it might be a good idea to contact the bank’s customer service for clarification, asking how and why the fee was charged.

• Keep records. Noting down all communications with the bank is especially important in situations where more than one unexpected fee shows up on a savings account statement.

Being proactive in this way may help savers avoid more fee charges.

Stay informed to avoid savings account fees

Many savings accounts have no fees; however, some may incur charges based on account type, usage, and specific criteria like excessive withdrawals, fund transfers, or falling below minimum balances. Staying informed and actively managing accounts may help savers avoid unexpected fees. Exploring other banks and savings accounts is always an option.