A service charge is a flat fee your bank takes from your account for maintaining it or for falling below a minimum balance
A service charge is money your bank deducts from your account each month (or sometimes each quarter) simply for having the account open. It is not tied to a specific action you took—like overdrawing or using an ATM—the way other fees are. The bank charges it because they say it costs them to run your account, process your transactions, and maintain their systems.
The most common type is a monthly maintenance fee. This might be $5, $10, or more per month, depending on the bank and the type of account. Some banks waive it if you keep a certain balance in the account—often $500 to $1,500—or if you set up direct deposit. Others charge it no matter what. A few banks do not charge a service charge at all, which is why shopping around matters.
Service charges are different from overdraft fees (which you pay when you spend money you do not have) or ATM fees (which you pay for using another bank's machine). A service charge happens automatically whether you use the account actively or not.
Key Takeaways
- A service charge is a monthly or quarterly fee the bank takes from your account for maintaining it, separate from fees for specific actions like overdrafts.
- Many banks waive the service charge if you keep a minimum balance, set up direct deposit, or meet other conditions—read your account agreement to see yours.
- The amount varies widely by bank and account type, from zero to $15 or more per month.
- You can avoid service charges by switching to a bank that does not charge them, or by meeting the waiver conditions your current bank sets.
How banks decide what to charge
Banks say service charges cover the cost of staff, technology, and the physical branches or online systems you use. In reality, the fee is also profit—banks use it to offset the money they lose on accounts that sit idle or hold very small balances. If you keep $100 in a checking account and never use it, the bank makes almost nothing from you, so they charge a fee to make the account worth their while.
The amount varies widely. A large national bank might charge $12 a month. A credit union or online bank might charge nothing. Some banks charge different amounts for different account types—a basic checking account might have a $5 fee, while a premium account with more features might have a $25 fee. The bank's fee schedule is in your account agreement, which you receive when you open the account or can request anytime.
When the service charge gets waived
Most banks that charge a service charge will waive it if you meet one or more conditions. The most common are:
- Keep a minimum balance (often $500 to $2,500) in the account at all times
- Set up direct deposit of your paycheck
- Make a certain number of debit card purchases each month
- Maintain a linked savings account with the same bank
- Be a student, senior, or military member (some banks offer fee waivers for these groups)
If you do not meet the waiver condition, the fee comes out automatically. Some banks let you see in your online banking whether you are on track to avoid the fee that month. If you are close to the minimum balance but not quite there, you might deposit money just before the fee is charged to avoid it—though this only works if you know when the fee hits (usually a specific day each month).
Service charges versus other monthly fees
It helps to separate service charges from other fees that might appear on your statement. An overdraft fee happens when you spend more than you have. An ATM fee happens when you use another bank's machine. A wire transfer fee happens when you send money to another bank. A foreign transaction fee happens when you use your card abroad. A service charge happens whether you do any of these things or not.
Some banks bundle these under "maintenance" or "account fees" on your statement, so the language can be confusing. If you see a charge you do not recognize, your bank's website or a call to customer service can tell you what it is. Many banks let you download a fee schedule that explains every charge they offer.
How to avoid service charges
The simplest way is to switch banks. Many online banks and credit unions charge no service charge at all, and they often pay higher interest on savings accounts too. If you like your current bank, check whether you meet the waiver conditions. If you do not, ask whether you can. Some banks will waive a fee if you ask, especially if you have been a customer for a long time or if you keep other accounts with them.
If you cannot meet the minimum balance requirement, consider whether a different account type at the same bank might have a lower fee or no fee. Some banks offer a "basic" checking account with no frills and no fee, alongside a "premium" account with more features and a higher fee. You do not have to take the premium version.
Keep in mind that a service charge of $10 a month adds up to $120 a year. Over five years, that is $600 that could have stayed in your account. If you are comparing banks, factor in the service charge along with interest rates, ATM access, and customer service quality.
What happens if you cannot pay the service charge
If your account balance is too low to cover the service charge when it is deducted, the bank will usually take it anyway, which can push your account into the negative. This then triggers an overdraft fee on top of the service charge. So a $10 service charge on an account with $5 in it becomes a $10 service charge plus a $35 overdraft fee, leaving you $40 in the hole.
This is one reason why service charges hit lower-income customers hardest. If you are living paycheck to paycheck, a service charge you cannot avoid can spiral into overdraft fees. This is also why many banks and nonprofits have pushed for "no-fee" checking accounts—to prevent this trap.
Reading your account agreement for service charge details
Your bank sends you an account agreement (sometimes called a "disclosure" or "terms and conditions") when you open the account. This document lists the service charge amount, when it is charged, and what conditions waive it. If you cannot find yours, log into your online banking and look for "account terms," "disclosures," or "fees." You can also call the bank and ask them to email or mail it to you.
The agreement will also tell you whether the service charge can change. Banks can usually raise fees, but they must notify you in advance—usually 30 days. If your bank raises the service charge and you do not want to pay it, you can close the account and move to another bank.
Frequently Asked Questions
Can a bank charge a service charge if I do not use my account?
Yes. A service charge is not based on how much you use the account—it is based on the bank maintaining it. Even if you never make a transaction, the bank can charge the fee every month unless you meet a waiver condition (like keeping a minimum balance) or the account type has no service charge.
Is a service charge the same as an overdraft fee?
No. A service charge is a monthly fee for having the account. An overdraft fee is a separate charge that happens only when you spend more money than you have. You can be charged both in the same month if your account goes negative and you do not meet the service charge waiver condition.
What if my bank charges a service charge I did not know about?
Call the bank and ask what the charge is for. If it was not clearly disclosed in your account agreement, ask whether they will refund it. Many banks will refund one or two unexpected fees as a courtesy, especially if you have been a customer for a while. If the bank refuses and you are unhappy, you can close the account and move to another bank.
Do all banks charge a service charge?
No. Many online banks, credit unions, and some traditional banks offer checking accounts with no service charge at all. You may have to meet certain conditions (like setting up direct deposit) or keep a small minimum balance, but the base fee is zero. It is worth comparing banks before you open an account.
Can I get a service charge waived if I keep a low balance?
Only if your bank offers a waiver for low-balance accounts, which is rare. Most waivers require you to keep a minimum balance (the opposite of a low balance), set up direct deposit, or meet another condition. If your bank does not offer a waiver you can meet, consider switching to a bank that does not charge a service charge.