People type this into search every day: bank account fee comparison.
The usual answer is the monthly fee on the rate sheet. A free account can cost more once a year of overdrafts is included, and a fee account can come out ahead when its APY is high enough for the balance you keep.
This page compares two sets of numbers you type. It is not a recommendation to open either account, and it is not tax advice.
Fees for the year, then interest on a steady balance
The bank account fee comparison scores each account as:
monthly fee × 12 + annual overdraft fees − balance × APY
The lower net cost wins. A negative net cost means the interest is larger than the fees. You are ahead for the year on these inputs.
The balance stays constant. Bonuses, fee waivers, and taxes on interest are excluded. If a fee is waived when you keep a minimum balance, type $0 in the fee box. The tool will not apply the waiver for you.
Fig 1
A year of fees, minus a year of interest
APY is applied to the average balance you type
Net cost is twelve monthly fees, plus overdraft dollars, minus balance times APY. The lower number wins.
Regulation DD, in Appendix A to 12 CFR 1030, defines APY as the annualized rate that reflects interest and compounding. When the term is 365 days, APY = 100 × (interest ÷ principal), so interest = principal × APY ÷ 100. That is the multiplication in the formula. The same appendix says APY reflects interest only. It does not include a bonus, and it does not subtract fees. 12 CFR 1030.4 is why the fee still has to be disclosed on its own, including a monthly service fee and the conditions for an overdraft fee.
The CFPB’s overdraft explainer describes an overdraft as the bank paying a transaction the account could not cover, then charging a fee on top of the amount you repay. The tool wants that fee as a dollar total for the year, not as a count of events.
The compound interest post is what happens when the balance is allowed to grow. This comparison freezes it. The subscription post is the same “price times twelve” habit applied to software instead of a checking account.
Example 1: the published $5,000 balance
Here are the calculator defaults:
- average balance: $5,000
- Account A monthly fee: $12, APY 0.5%, overdraft fees $0
- Account B monthly fee: $0, APY 3.5%, overdraft fees $0
Account A fees: 12 × 12 = $144.00
Account A interest: 5000 × 0.005 = $25.00
Account A net cost: 144 − 25 = $119.00
Account B fees: $0.00
Account B interest: 5000 × 0.035 = $175.00
Account B net cost: 0 − 175 = -$175.00
The tool picks Account B. The gap is 119 − (−175) = $294.00.
Calculator result
Bank account fee comparison
- Average balance
- $5,000.00
- Account A monthly fee
- $12.00
- Account A APY
- 0.5%
- Account A annual overdraft fees
- $0.00
- Account B monthly fee
- $0.00
- Account B APY
- 3.5%
- Account B annual overdraft fees
- $0.00
Account B
lower net annual cost
- Account A net cost
- $119.00
- Account B net cost
- -$175.00
- Difference
- $294.00
Looking only at the monthly fee, A costs $144 more per year. The APY gap adds another 175 − 25 = $150 of interest. 144 + 150 = 294. That is the whole difference.
Fig 2 · 1/3
Fees and interest on $5,000
Defaults. Account B's monthly fee is $0.
A year at $5,000
A fees
$144
A interest
$25
B interest
$175
Account A charges $144 and pays $25 of interest.
Account B pays $175. Its net cost is -$175.00.
Fig 3 · 1/2
Where the $294 gap comes from
Account A costs $144 in fees. Account B pays $150 more interest.
Fee gap
$144
Interest gap
$150
The fee gap is $144 a year.
The interest gap is $150. Together they are $294.
144 ÷ 294 is 49.0%. 150 ÷ 294 is 51.0%.
Example 2: a $400 balance, and a $25,000 balance
Same two accounts. Only the balance changes.
At $400:
Account A interest: 400 × 0.005 = $2.00. Net cost: 144 − 2 = $142.00.
Account B interest: 400 × 0.035 = $14.00. Net cost: -$14.00.
Account B still wins. The difference is $156.00.
At $25,000:
Account A interest: 25000 × 0.005 = $125.00. Net cost: 144 − 125 = $19.00.
Account B interest: 25000 × 0.035 = $875.00. Net cost: -$875.00.
Difference: $894.00.
On these two rate sheets, a higher balance never flips the winner. B has no fee and a higher APY, so the gap widens as the balance grows. The flip shows up in Example 6, where the fee account is the one with the higher APY.
Fig 4 · 1/2
Interest earned at three balances
Account A at 0.5%. Account B at 3.5%. Fees are not in these bars.
- Account A
- Account B
| Category | Account A | Account B |
|---|---|---|
| $400 | $2.00 | $14 |
| $5,000 | $25 | $175 |
| $25,000 | $125 | $875 |
At $400, A pays $2 and B pays $14.
At $5,000, A pays $25 and B pays $175. At $25,000, B pays $875.
Example 3: what if the $12 fee is waived
Keep the $5,000 balance, both APYs, and B’s $0 fee. Set A’s monthly fee to $0, the way you would if the waiver applies and you follow the tool’s instruction to type the fee you actually pay.
Account A net cost: 0 − 25 = -$25.00
Account B net cost: -$175.00
Difference: $150.00
Account B still wins. Waiving A’s fee removes the $144. It does not remove the $150 interest gap from Example 1. A waiver is worth typing. It is not, on these rates, enough to catch an account paying 3.5%.
Example 4: the balance that offsets A’s own fee
Stay with A’s $12 fee and 0.5% APY. Ignore B for a moment.
144 ÷ 0.005 = $28,800
At a $28,800 average balance, A’s interest is 28800 × 0.005 = $144.00, and A’s net cost is $0.00. The fee has eaten the interest and nothing is left. B, still at 3.5% and no fee, earns 28800 × 0.035 = $1,008.00, so its net cost is -$1,008.00. The tool still picks B. The difference is $1,008.00, which is B’s interest, because A has netted to zero.
That $28,800 figure is where A breaks even against an account that pays nothing. People sometimes treat “the interest covers the fee” as the end of the comparison. It is the end of A’s fee. B can still be $1,008 ahead.
Example 5: the common mistake, shop the monthly fee and stop
Account A is $12 a month. Account B is $0. The fee-only story says A costs $144 more each year, on any balance.
At the $5,000 default, the full net-cost gap is $294, from Example 1. The fee-only story misses half of it, the $150 of extra interest.
At $400, from Example 2, the full gap is $156. Close to $144, because almost no interest is in play. The fee-only shortcut is least wrong when the balance is small and both APYs are low. It gets worse as the balance climbs. At $25,000 the shortcut still says $144. The tool says $894.
Zero both APYs and the shortcut becomes the whole answer. On $5,000, with A at $12 a month and B at $4 a month:
Account A net cost: 12 × 12 = $144.00
Account B net cost: 4 × 12 = $48.00
Difference: $96.00
Account B wins, and every dollar of the gap is fees. Interest dropped out because you set both yields to zero.
Example 6: what if the fee account pays more interest
A new pair. The monthly fee is no longer paired with the worse yield.
- Account A: $15 a month, APY 4.5%, overdrafts $0. Annual fees: 15 × 12 = $180
- Account B: $0 a month, APY 0.5%, overdrafts $0
Net cost of A: 180 − balance × 0.045
Net cost of B: 0 − balance × 0.005
Set them equal: 180 − 0.045 × balance = −0.005 × balance. Then 180 = 0.04 × balance, so balance = 180 ÷ 0.04 = $4,500.
| Balance | Account A net | Account B net | Winner | Gap |
|---|---|---|---|---|
| $2,000 | $90.00 | -$10.00 | B | $100.00 |
| $4,000 | $0.00 | -$20.00 | B | $20.00 |
| $4,499 | -$22.46 | -$22.50 | B | $0.04 |
| $4,500 | -$22.50 | -$22.50 | A | $0.00 |
| $4,501 | -$22.54 | -$22.51 | A | $0.04 |
| $8,000 | -$180.00 | -$40.00 | A | $140.00 |
| $15,000 | -$495.00 | -$75.00 | A | $420.00 |
Calculator result
Bank account fee comparison
- Average balance
- $2,000.00
- Account A monthly fee
- $15.00
- Account A APY
- 4.5%
- Account A annual overdraft fees
- $0.00
- Account B monthly fee
- $0.00
- Account B APY
- 0.5%
- Account B annual overdraft fees
- $0.00
Account B
lower net annual cost
- Account A net cost
- $90.00
- Account B net cost
- -$10.00
- Difference
- $100.00
Below $4,500 the free account wins. At $4,000, A’s interest is exactly $180 and A’s net cost is $0. B still earns $20, so B is $20 ahead of an account that has only covered its own fee. At $4,500 the nets match at -$22.50. The tool prints Account A on a tie, because it keeps A when A’s cost is lower or equal. One dollar later, at $4,501, A is ahead by $0.04.
At $8,000, A earns 8000 × 0.045 = $360 and nets -$180. B earns $40. A wins by $140. The $180 fee has been paid, and the extra yield still leaves A ahead.
Fig 5 · 1/2
Interest against a $180 fee
Account A at 4.5%, Account B at 0.5%. A's $180 annual fee is not in the bars.
- A interest
- B interest
| Category | A interest | B interest |
|---|---|---|
| $2,000 | $90 | $10 |
| $8,000 | $360 | $40 |
| $15,000 | $675 | $75 |
At $2,000, A earns $90, short of the $180 fee.
At $8,000, A earns $360. At $15,000, A earns $675.
Check the $15,000 row: A interest is 15000 × 0.045 = $675, net cost 180 − 675 = -$495. B interest is 15000 × 0.005 = $75, net cost -$75. Difference $420. The stacked chart shows the interest. Subtract $180 from A’s bar to get A’s net cost.
Example 7: overdrafts on the “free” account
- balance: $2,500
- Account A: monthly fee $0, APY 0.01%, overdraft fees $140 for the year
- Account B: monthly fee $15, APY 4%, overdraft fees $0
Account A interest: 2500 × 0.0001 = $0.25
Account A net cost: 0 + 140 − 0.25 = $139.75
Account B fees: 15 × 12 = $180.00
Account B interest: 2500 × 0.04 = $100.00
Account B net cost: 180 − 100 = $80.00
The tool picks Account B. The gap is 139.75 − 80 = $59.75.
Calculator result
Bank account fee comparison
- Average balance
- $2,500.00
- Account A monthly fee
- $0.00
- Account A APY
- 0.01%
- Account A annual overdraft fees
- $140.00
- Account B monthly fee
- $15.00
- Account B APY
- 4%
- Account B annual overdraft fees
- $0.00
Account B
lower net annual cost
- Account A net cost
- $139.75
- Account B net cost
- $80.00
- Difference
- $59.75
A has no monthly fee and still costs more, because $140 of overdrafts swamps a $0.25 yield. B’s $15 fee is $180 a year, and $100 of interest cuts that to $80. The CFPB note above is the reason an overdraft fee exists at all. This row is only the dollars you already paid, or expect to pay, over a year.
Example 8: both accounts charge a fee
- balance: $3,000
- Account A: $10 a month, APY 2%, overdrafts $35
- Account B: $5 a month, APY 1.5%, overdrafts $0
Account A: fees 10 × 12 = $120, plus $35, minus 3000 × 0.02 = $60. Net cost $95.00.
Account B: fees 5 × 12 = $60, minus 3000 × 0.015 = $45. Net cost $15.00.
Account B wins by $80.00.
A’s rate is higher (2% versus 1.5%). The extra interest is 60 − 45 = $15. A’s extra fees are (120 + 35) − 60 = $95. The rate edge gives back $15 of a $95 fee gap, and $80 remains. A higher APY does not win by itself when the fee difference is larger than the interest difference.
The comparisons next to each other
| Example | Balance | A net cost | B net cost | Winner | Gap |
|---|---|---|---|---|---|
| 1. Defaults | $5,000 | $119.00 | -$175.00 | B | $294.00 |
| 2. Small balance | $400 | $142.00 | -$14.00 | B | $156.00 |
| 2. Large balance | $25,000 | $19.00 | -$875.00 | B | $894.00 |
| 3. A’s fee waived | $5,000 | -$25.00 | -$175.00 | B | $150.00 |
| 4. A covers its own fee | $28,800 | $0.00 | -$1,008.00 | B | $1,008.00 |
| 5. Both APYs at zero | $5,000 | $144.00 | $48.00 | B | $96.00 |
| 6. Below the flip | $2,000 | $90.00 | -$10.00 | B | $100.00 |
| 6. The tie | $4,500 | -$22.50 | -$22.50 | A | $0.00 |
| 6. Above the flip | $8,000 | -$180.00 | -$40.00 | A | $140.00 |
| 7. Overdrafts on A | $2,500 | $139.75 | $80.00 | B | $59.75 |
| 8. Both charge fees | $3,000 | $95.00 | $15.00 | B | $80.00 |
Open the bank account fee comparison with the average balance you actually keep, the monthly fee after any waiver you qualify for, the APY from the disclosure, and a year of overdraft dollars if you have them. A negative result means interest is larger than those fees on a frozen balance. The APY savings growth calculator is the next step when the balance will not stay still. Taxes on the interest are outside both tools.