You might be surprised to read an article from a bank warning you about hidden fees. However, at N26, we aim to be as transparent and upfront as possible when it comes to our costs and pricing to help you stay in full control of your money.
Most of us are familiar with main bank fees, from monthly maintenance costs and wire transfer charges, to ATM fees that appear in your accounts when you withdraw money. Yet, when it comes to many banks, this isn’t always the end of it – far from it, in fact.
There are all sorts of additional bank fees that you might have to pay, from inactivity fees to early closure fees, and it can be hard to recognize and find out more about them. So, in the name of transparency, we’ve put together a list of hidden fees that banks charge in the Single Euro Payments Area (SEPA) – an area that includes the entire European Union, as well as a few additional countries such as Switzerland and Norway.
The 13 hidden fees in banking to be aware of:
Debit/Credit-Card Replacement Fee
Hidden Fees for Having Insufficient Funds
Returned Item Fee
Stop Payment Fee
Paper Statement Fee
Early Closure Fee
Minimum Balance Requirement Penalty Fee
Bank Notary Fee
Incorrect Information Fee
Online Account Fee
International Transaction Fee
Local & Unique Hidden Fees
1. Debit/Credit-Card Replacement Fee
A card delivery fee or card replacement fee is what you have to pay if you request a new credit or debit card from your bank – this is usually the case if you’ve lost your card or it has been broken or stolen. And, as is often the case, the amount you pay varies from country to country.
For example, while across the three biggest banks in France the fees range between €12.60 and €16, none of the United Kingdom’s major banks make you pay a debit card or credit card replacement fee.
Another hidden bank fee is an insufficient funds fee that comes into play if you try to spend more money in your account than you currently have. When this happens, the bank will either let you go into your overdraft, or “return” the payment, meaning the transaction is canceled. Once you reach the limit of the fee-free allowance of your overdraft, the fees can really begin to bite.
In Austria, many of the major banks already have an average overdraft fee of 11% per annum in place. As with debit card and credit card replacement fees, the charges that UK banks levy can vary: while Bank A can make you pay £8 per day (up to a maximum of £32) in unpaid transaction fees, Bank B limits these overdraft charges to a maximum of £80 a month. Comparatively, Bank C can levy a fee of 1p for every £6 as an arranged overdraft fee.
You could also be charged a returned item fee if you try to make a transaction that can’t go through – much like the insufficient funds fee listed above. This is a hidden bank fee you’ll be charged if a payment is blocked, with the reason being that you just don’t have enough money in your account, or that your account has been frozen.
A stop payment fee is what you have to pay if you order for your bank to cancel a cheque you’ve sent. Although not all banks charge this hidden bank fee, it is common for banks to charge a fee for a canceled cheque. Here are a few examples of the kind of costs you might encounter:
Of the three largest banks in France, Bank A charges €15.50 to cancel a cheque, Bank B charges €12.50, and Bank C charges €16 for cancelling a cheque in-branch. It’s free for doing it online.
The three biggest UK banks charge an average of £11 to cancel a cheque (unless the cheque was stolen, in which case no charge is levied).
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You could get charged a hidden bank fee known as an inactivity fee if you don’t use a bank account for a long period of time. Doing so can attract the bank’s attention – they may eventually contact you about it, and could even try to close your account. Alternatively, they could charge a monthly payment for not using the account.
Inactivity fees, also known as dormancy fees, are rare in European current accounts. Although this does sometimes happen — one small Maltese bank makes you pay €5/month, for example. What's more common is getting rewards for using your account regularly such as when you make a certain number of transactions per month, which could make you eligible to receive interest.
Punitive inactivity fees are a little bit more common with credit cards, and even more so with prepaid cards, such as store credit cards or travel money cards. These cards often have unused credit on them – for example, if a store credits your card with a refund for a returned item, or if you don’t spend all your holiday money while abroad. An inactivity fee can apply when there is a credit balance on these cards, so take care – particularly if you’ve got a lot of different cards:
In the UK, only one credit card provider charges a dormancy fee (£20 per annum). However, prepaid card providers charge fees ranging from £1 to £10 a month.
It is a similar situation in Germany, where prepaid cards from major providers can be hit with an inactivity fee of €2.50 to €3.75.
It wasn’t so long ago that all banks would send their clients a paper statement through the post every month. This used to be the only way you could view your monthly transaction history.
These days, because of online banking, not all banks send customers monthly statements by post. Those that do generally won’t charge for a single statement per month, or they may charge just for postage. However, when requesting a copy of a statement, there will probably be a fee to pay. It will likely be just a few euros, but it can be irritating – especially as some banks charge per page.
With some bank accounts, you have to pay an early closure fee if you close the account soon after opening it. These fees are particularly common on savings accounts, where your money is meant to be stored securely for a fixed term. On a savings account, the fee could either be fixed, say at €30, or based on your account balance – in such cases, you might have to pay back any interest you’ve earned.
Even if there’s no specific early closure fee on your account, closing it could still require some payments to be made in order to settle up fully with the bank.
8. Minimum Balance Requirement Penalty Fee
In order to get the full benefits from your bank account, you might be expected to keep at least a certain amount of money in it – or to have a certain amount paid into the account each month. Missing those targets could result in you losing out on bonuses, or having to pay extra fees. For example, sometimes a bank account’s maintenance fee is only payable if you have less than a certain amount.
How much is the minimum amount in order to avoid a minimum balance requirement penalty fee? Well, it could be as low as €100, or as high as €3,000 – it all depends on the type of account and the particular benefits that are at stake.
Sometimes it’s legally necessary to get important documents certified. Your local bank branch might be able to provide that certification, especially if they have a qualified notary (a type of lawyer) on staff. There’s often a small fee to pay for this service, but if you need more detailed notarial services, you’ll have to pay a larger fee, like €100.
10. Incorrect Information Fee
Submitting incorrect information to your bank causes them more work, as they might have to spend time tracking down the correct details. This might happen if you submit the wrong IBAN when trying to make a transfer, for example.
Some banks therefore charge a discrepancy fee or incorrect information fee, which might be just a few cents or as much as €50.
In most SEPA countries this isn’t an issue, but in some, you might have to pay an account fee for internet or mobile banking – or even telephone banking. It could cost you a flat fee (such as €8, for example) although you could get it refunded if you make enough transactions.
12. International Transaction Fee
Travelling abroad often results in extra bank or card charges. An international transaction fee or foreign transaction fee is what you pay on purchases or cash withdrawals during your trip abroad. You’ll probably have to pay this fee, often just under 3%, on every single transaction. You could even be charged a few cents simply for checking your balance at a foreign ATM.
It’s not all bad news, though: within SEPA, international transactions have never been easier, particularly if you’re travelling between the two countries that use the Euro. In these cases, you won’t even have an exchange rate to worry about.
And that’s not all! You could also end up facing the following hidden fees, some of which might really take you by surprise:
Stamp duty in Ireland. The Irish government charges a small tax on most bank cards, including ATM cards, debit cards, credit cards and charge cards. While the tax is €30 per year for credit and charge cards, it can be up to €2.50 for ATM cards or €5 for debit cards.
Debit cards in France. France is one of those countries where you might face a yearly charge simply for having a debit card – something that you might expect to get for free. At the lower end of the scale, a debit card could cost you around €40 per year, but one with more services could cost several hundred Euros annually.
Direct debits in Lithuania. It’s not common to have to pay for setting up a direct debit, but sometimes it happens. Lithuania is one SEPA country where you might find yourself paying a few Euros for this.
Winning the lottery in Greece. Yes, really! You face a fee of €1 if you win OPAP, the Greek lottery, and then go to the National Bank of Greece to collect your winnings. But hey, it’s not all bad news – at least you’ve just won the lottery!
Here at N26, our mission is to cut back fees wherever we can. Most of the above fees, including the inactivity fee, early closure fee and incorrect information fee, doesn’t apply to a N26 account – there isn’t even an international transaction fee when you pay for something with your N26 Mastercard abroad. So, for anyone concerned about additional bank charges, N26 is well worth a look.
How to claim back a bank charge
If you feel you've been unfairly charged a fee, or if that fee is preventing you from paying off a large debt, you can request to have this fee waived. For written requests, you can find templates online. Be formal in your correspondence, and include all the details of the fee and a customer reference number. Your bank is not necessarily legally obliged to refund you, unless there’s been an error on their part, but it's worth a try.
How can I avoid international transaction fees
Before travelling abroad, it is important that you inquire about international transaction fees your bank may charge. Quite often, banks may withdrawal fees as well as fees on any card purchase. This fee is often just under 3%, on every single transaction. To avoid paying these fees, the best is to open an account at a bank that doesn't charge international transaction fees. With an N26 account, you can enjoy free withdrawals in the euro zone and pay no fees when paying by card abroad.
We want to simplify banking for everyone. We’re bringing you a series of articles that shine a light on the basics of money, finance and all things banking-related – it’s often a lot simpler than you might think.