Mayesha, a 28-year-old content creator from Delhi, nearly dropped her phone when she saw ₹2,115 mysteriously disappear from her account last month. The culprit? Her own bank's hidden charges - ₹623 for exceeding ATM limits, ₹450 in minimum balance penalties, ₹382 from UPI merchant payments, ₹510 in credit card fees, and ₹150 for cheque-related services.

Like most millennials, she'd ignored the "terms and conditions," assuming digital banking was cost-free. Now, as she stares at her dwindling balance, Mayesha realises these small deductions are silently eating into her hard-earned money.

Let’s learn about the 5 hidden bank charges in this blog.

1. ATM Withdrawal Charges

ATM withdrawal charges are a hidden cost that can silently reduce your bank balance, especially when you are not aware of them. In 2025, the RBI increased the ATM interchange fees, which directly affect customers who cross their free transaction limits.

From May 1, 2025, the RBI has increased charges on ATM cash withdrawals. Now, if you withdraw cash from an

ATM after crossing your monthly free transaction limit, you will be charged ₹23 per transaction. Earlier, this charge was ₹21.

Understand Free Transaction Limits

Read More – Is Your Bank Charging Hidden Fees?

Every customer gets some free ATM transactions every month:

From Own Bank’s ATM: 5 free transactions in a month (including financial and non-financial).

From Other Bank’s ATM:

Metro Cities: 3 free transactions per month
Non-Metro Cities: 5 free transactions per month

After these limits, each extra transaction will be charged ₹23.

Ajay’s Story: The Impact of ATM Charges

Ajay, a 28-year-old software engineer living in Bengaluru, earns a monthly salary of ₹60,000. He uses ATMs often for cash withdrawals.

Ajay’s ATM Usage – April 2025

Week 1:

Transaction 1: Withdrew ₹2,000 from own bank’s ATM (Free)
Transaction 2: Withdrew ₹1,500 from another bank’s ATM (Free)
Transaction 3: Checked balance from another bank’s ATM (Free)

Week 2:

Transaction 4: Withdrew ₹3,000 from own bank’s ATM (Free)
Transaction 5: Withdrew ₹2,500 from another bank’s ATM (Free)

Week 3:

Transaction 6: Withdrew ₹1,000 from another bank’s ATM (Charge: ₹23)
Transaction 7: Checked balance from another bank’s ATM (Charge: ₹7)

Week 4:

Transaction 8: Withdrew ₹2,000 from own bank’s ATM (Charge: ₹23)
Transaction 9: Withdrew ₹1,500 from another bank’s ATM (Charge: ₹23)

Total Charges:

Cash Withdrawals: 3 transactions × ₹23 = ₹69
Balance Enquiry: 1 transaction × ₹7 = ₹7
Total: ₹69 + ₹7 = ₹76

Ajay crossed his monthly free transaction limit and ended up paying ₹76 as extra charges. If he had planned his transactions, he could have avoided these charges.

Tips to Avoid ATM Charges

Plan Withdrawals: Withdraw larger amounts at once to reduce the number of transactions.
Use Your Own Bank’s ATM: Prefer your bank’s ATM as it offers more free transactions.
Use Digital Payments: Reduce the need for cash by using UPI, mobile wallets, and net banking.
Keep a Record of Transactions: Track your ATM usage each month so you do not cross your free limit.

ATM withdrawal charges may seem small, but if you ignore them, they can affect your monthly budget. Ajay’s story teaches us that with a little planning and awareness, you can avoid these unnecessary charges.

2. Minimum Balance Non-Maintenance Charges

Minimum Balance Non-Maintenance Charges (MBNMC) are hidden bank charges that can silently deduct money from your account if you do not maintain the required minimum balance in your savings account.

What is MBNMC?

Banks expect customers to maintain a certain minimum balance, which depends on the account type and location. If you do not maintain this balance, the bank deducts penalty charges from your account.

Minimum Balance Rules and Penalty Charges of Major Banks (2025)

Bank	Minimum Balance Requirement (Metro/Urban)	Penalty Charges for Non-Maintenance
SBI	₹3,000 (Metro), ₹2,000 (Semi-Urban), ₹1,000 (Rural)	₹10–₹15 + GST based on how much balance is short
HDFC Bank	₹10,000 (Metro/Urban), ₹5,000 (Semi-Urban)	Up to ₹600 or 6% of the shortfall, whichever is less
ICICI Bank	₹10,000 (Metro/Urban), ₹5,000 (Semi-Urban)	₹100 + 5% of the shortfall
PNB	₹2,000 (Urban), ₹1,000 (Semi-Urban), ₹500 (Rural)	₹600 (Urban), ₹500 (Semi-Urban), ₹400 (Rural)
Yes Bank	₹10,000 (All Locations)	5–10% of shortfall, max ₹500/month

Ankur’s Story: An Example

Ankur is a college student from Bengaluru who has a savings account in HDFC Bank.

Also Read - How to Avoid Hidden Bank Charges That Eat Up Your Savings

Account Details

Bank: HDFC Bank
Location: Bengaluru (Metro)
Required Average Monthly Balance (AMB): ₹10,000

Transactions in April 2025

Date	Transaction Type	Amount (₹)	Closing Balance (₹)
April 1	Opening Balance	—	5,000
April 5	Deposit	2,000	7,000
April 10	Withdrawal	1,000	6,000
April 15	Deposit	3,000	9,000
April 20	Withdrawal	2,000	7,000
April 25	Deposit	1,000	8,000
April 30	Withdrawal	500	7,500

Average Monthly Balance (AMB) Calculation

AMB = (Total of daily closing balances in April) / 30

Let’s calculate the total:

April 1–4: ₹5,000 × 4 days = ₹20,000
April 5–9: ₹7,000 × 5 days = ₹35,000
April 10–14: ₹6,000 × 5 days = ₹30,000
April 15–19: ₹9,000 × 5 days = ₹45,000
April 20–24: ₹7,000 × 5 days = ₹35,000
April 25–29: ₹8,000 × 5 days = ₹40,000
April 30: ₹7,500 × 1 day = ₹7,500

Total = ₹212,500

AMB = ₹212,500 ÷ 30 = ₹7,083.33

Penalty Calculation

Required AMB = ₹10,000
Actual AMB = ₹7,083.33
Shortfall = ₹2,916.67

Penalty = 6% of ₹2,916.67 = ₹175

(Since ₹175 is less than the ₹600 maximum, the penalty is ₹175)

So, ₹175 was deducted from Ankur’s account as a penalty.

How to Avoid MBNMC?

Monitor Regularly: Check your account balance often.
Set Auto Alerts: Enable SMS/email alerts for low balance.
Consider Zero Balance Accounts: If you do not use the account much, consider options like Jan Dhan Yojana.
Link Fixed Deposit: Some banks waive the minimum balance if you link an FD.
Review Account Type: Choose the right account type that fits your needs.

To avoid MBNMC, it is important to check your account and understand your bank’s rules regularly.

3. UPI Transaction Fees (For Certain Payments)

Unified Payments Interface (UPI) has transformed digital payments in India, but in 2025, some specific UPI transactions now come with fees, which can feel like hidden charges if you are not aware of them.

UPI Transaction Fees: What Has Changed?

From April 1, 2023, the National Payments Corporation of India (NPCI) introduced an interchange fee on certain UPI transactions. This fee applies only to merchant payments made through Prepaid Payment Instruments (PPIs) like wallets – Paytm, PhonePe, Google Pay – when the amount exceeds ₹2,000.

Think of it like a toll charge that kicks in only when you take a specific payment route (via wallet) and only above a certain speed (₹2,000).

When Does This Fee Apply?

Transaction Type	Notes
Bank Account to Bank Account (P2P)	No fee.
Wallet to Merchant (P2M) > ₹2,000	1.1% interchange fee is applied.
Wallet to Merchant (P2M) ≤ ₹2,000	No fee.
Bank Account to Merchant (P2M)	No fee.

Note: The fee is charged to merchants, but some may pass it on to customers. So in practice, you might end up paying extra.

Example: Ravi’s Online Shopping

Let’s look at a real-life scenario:

User: Ravi
Payment Mode: Paytm Wallet
Purchase: Bought a product worth ₹3,000 from a merchant

Interchange Fee Calculation:

1.1% of ₹3,000 = ₹33
If the merchant shifts the fee to the customer, Ravi will end up paying ₹3,033

It is like ordering food and suddenly seeing a mysterious “packaging fee” added at checkout.

How to Avoid These Charges?

Here are some smart ways to dodge the extra costs:

1. Use Bank Account for UPI Payments: Direct payments from your bank account using UPI remain completely free.

2. Keep Payments Below ₹2,000 When Using Wallets: If you are using a wallet like Paytm or PhonePe, try to keep the amount under ₹2,000 to stay in the no-fee zone.

3. Ask the Merchant: Before making a wallet payment, confirm if the merchant will pass the interchange fee to you.

4. Use UPI Lite for Small Transactions: For micro-payments, UPI Lite is a great option. It is fast, simple, and free of such charges.

UPI has made payments easier, faster, and safer – but with these new rules, being informed is your best protection. Whenever possible, choose bank account UPI payments to steer clear of any hidden fees.

5. Debit and Credit Card Charges

In today’s digital age, the use of debit and credit cards is increasing rapidly. But along with these cards, some hidden charges can silently reduce your account balance.

Debit Card Charges (2025)

State Bank of India (SBI) increased its debit card annual maintenance charges from April 1, 2024.

Card Type	Old Charges (₹)	New Charges (₹)
Classic/Silver/Global/Contactless	₹125 + GST	₹200 + GST
Yuva/Gold/Combo/My Card (Image Card)	₹175 + GST	₹250 + GST
Platinum	₹250 + GST	₹325 + GST
Pride/Premium Business	₹350 + GST	₹425 + GST

Apart from these, there are extra charges for card replacement, duplicate PIN generation, and international transactions.

Credit Card Charges (2025)

Credit cards also come with various types of charges:

Annual Fee: A fixed charge taken every year.
Late Payment Fee: Charged if you pay after the due date.
Cash Advance Fee: Charged on ATM withdrawals; 2.5% of the amount or ₹500 (whichever is higher).
Over-limit Fee: Charged if you spend beyond your credit limit.
Foreign Transaction Fee: 1.5% to 3.5% on international transactions.
Finance Charges: Interest on unpaid amount, up to 3% per month.

Example: Rohan’s Card Usage

Rohan is a salaried professional. He has an SBI Platinum Debit Card and an HDFC Credit Card.

Debit Card:

Annual Maintenance: ₹325 + 18% GST = ₹383.50
6th ATM Withdrawal in a month: ₹23 + 18% GST = ₹27.14
International ATM Withdrawal: ₹100 minimum + 3.5% of amount + GST

Credit Card:

Annual Fee: ₹1,000 + 18% GST = ₹1,180
Late Payment Fee on ₹4,000: ₹300
Cash Advance of ₹10,000: 2.5% = ₹250 + 18% GST = ₹295
Finance Charge on ₹10,000 for 30 days @ 3%/month = ₹300

Total Charges:

Debit Card: ₹383.50 + ₹27.14 = ₹410.64
Credit Card: ₹1,180 + ₹300 + ₹295 + ₹300 = ₹2,075
Grand Total = ₹2,485.64

How to Avoid These Charges?

Pay on Time: Always pay your credit card bills before the due date.
ATM Usage: Stay within the free transaction limit.
International Transactions: Use cards with low forex markup (which means you pay closer to the actual exchange rate, reducing overall costs).
Choose the Right Card: Pick a card that fits your spending habits.
Stay Informed: Read your bank’s charges and terms carefully.

By using your debit and credit cards wisely, you can avoid unnecessary charges. Always keep an eye on your transactions and make informed decisions.

5. Cheque Book & Demand Draft Fees

Even in today’s digital age, many people still use cheque books and demand drafts (DDs) — especially for official and offline transactions. But these services often come with hidden charges that can quietly reduce your account balance.

Cheque Book Charges (2025)

Banks like the State Bank of India (SBI) give limited free cheque leaves to customers. After that, extra cheque books come with charges.

Cheque Book Type	Charges (₹) + GST	Remarks
10 leaves	₹40 + GST	The first 10 leaves are free per financial year
25 leaves	₹75 + GST	Charges apply after the free quota
Emergency Cheque Book (10 leaves)	₹50 + GST	For urgent needs

Note: Senior citizens get a discount on cheque book charges.

Demand Draft (DD) Charges (2025)

DDs are a secure payment method, but banks charge for issuing and cancelling them.

DD Amount Range	Issuance Charges (₹) + GST
Up to ₹5,000	₹25 + GST
₹5,001 to ₹10,000	₹50 + GST
₹10,001 to ₹1,00,000	₹100 + GST
Above ₹1,00,000	₹5 per ₹1,000 + GST

Service	Charges (₹) + GST
DD Cancellation	₹200 + GST
DD Revalidation	₹200 + GST

Note: DD is valid for 3 months. After that, it needs to be revalidated.

Example: Ramesh's Experience

Ramesh is a businessman with a savings account in SBI.

Cheque Book Usage:

The first 10 cheque leaves are free in a financial year.
After that, Ramesh took a cheque book of 25 leaves.
Charges = ₹75 + 18% GST = ₹88.50

Demand Draft Issuance:

Ramesh made a DD of ₹1,20,000
Issuance Charges = ₹5 per ₹1,000 = ₹600 + 18% GST = ₹708

DD Cancellation:

Later, Ramesh cancelled the DD
Charges = ₹200 + 18% GST = ₹236

Total Charges:

Cheque Book = ₹88.50
DD Issuance = ₹708
DD Cancellation = ₹236
Total = ₹1,032.50

How to Avoid These Charges?

Use Digital Payments: Go for UPI, NEFT, RTGS instead of cheques or DDs.
Monitor Cheque Usage: Use cheque leaves only when necessary.
Consider DD Alternatives: Try online fund transfer methods.
Stay Informed: Regularly check your bank’s service charges.

Cheque books and demand drafts can be convenient, but understanding their charges and knowing how to avoid them can save you money.

Conclusion

In 2025, hidden bank charges – like ATM withdrawal fees, minimum balance penalties, UPI transaction costs, card maintenance fees, and cheque/DD charges – can silently erode your savings if overlooked. While digital banking offers convenience, staying informed about these costs is crucial to avoid unnecessary expenses.

Small fees add up over time, impacting your financial health. By planning transactions, maintaining minimum balances, opting for fee-free payment methods, and reviewing bank policies, you can minimise these deductions. Awareness and proactive management are key to ensuring your hard-earned money stays where it belongs: in your account. Always read the fine print and adapt your banking habits to save smarter.

FAQs

1. Why am I being charged for ATM withdrawals?

Banks charge fees when you exceed your monthly free ATM transaction limit, which varies based on your bank and location.

2. Do UPI payments have hidden charges?

Most UPI transactions are free, but a 1.1% fee applies on wallet-based merchant payments above ₹2,000, which some merchants may pass to you.

3. How can I avoid minimum balance penalties?

Maintain the required average balance in your account or switch to a zero-balance account to avoid non-maintenance charges.

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