How to use the bank fee vs interest comparison calculator
- Enter your average balance.
- List the accounts, one per line: name, monthly fee, balance that waives the fee, yearly interest rate and other yearly costs.
- Read the interest, costs and net result of each account at your balance.
- Use the second table to see the best account at other balances.
Formula
Interest = balance x yearly rate / 100
Fees = monthly fee x 12, or nothing when the balance is at or above the waiver balance
Net a year = interest - fees - other yearly costs
Interest is simple, with no compounding, so the figures are close for a year but not exact for rates that compound daily.
Three accounts at an average balance of $3,000
An online savings account at 1.5% with no fee earns $45.00. A branch checking account at 0.5% earns $15.00 and its $12 monthly fee is waived at $2,500, so it nets $15.00. A premium account at 3.5% earns $105.00 but charges $15 a month ($180) with a waiver at $5,000, and has $30 of other costs, so it nets -$105.00.
At $25,000 the order changes. The premium account earns $875.00, its fee is waived and after the $30 cost it nets $845.00, against $375.00 for the online account. The second table shows the premium account ahead at the larger balances. Its lead starts at $5,000, where the fee is waived.
Why the best account depends on the balance
A fee is a fixed amount, while interest grows with the balance. At a small balance a fee can wipe out the interest, and at a larger one the interest is far larger than the fee. Many accounts waive the fee above a balance, which makes the net result jump at that point. Comparing at one balance hides this, so the second table repeats the comparison at several balances.
Other yearly costs include things such as a paper statement charge, a debit card fee or a minimum-balance penalty. Enter whatever you expect to pay in a year.
Limits of the comparison
Rates change, and many accounts pay different rates on different parts of the balance. The tool uses one rate and one balance. To convert between a quoted rate and the real yield see the APY and APR Calculator, and to see compounding over years the Compound Interest Calculator. A fixed-term deposit may pay more, as the CD Calculator shows, and the Savings Calculator projects a growing balance.
Assumptions and limits
- Interest is a simple yearly rate on the average balance.
- The waiver applies when the average balance is at or above the amount you enter.
- The accounts shown are examples. Use the terms from each bank.
- Bonuses for opening an account and limits on transactions are not included.
Frequently asked questions
What goes in the waiver column?
The balance at which the monthly fee is not charged. Leave it blank if the fee is always charged.
Why is a fee column shown in parentheses?
Costs are shown as negative amounts in parentheses so that a minus sign cannot be lost in a narrow column.
Can I compare more than three accounts?
Yes, up to eight. Each line needs a name and the four numbers described above.
Does the average balance matter?
Yes. Banks often test the waiver on the daily or monthly average, not on the balance on one day, so use your usual average.