Can I offset bank service fees with the interest the bank pays on credit balances?

Answer

As long as you have not withdrawn the interest from the bank, you may offset the bank charges with the interest credited to your account. After withdrawing the interest in the form of cash, it will not be permissible to re-deposit it to offset the service charges. It will then have to be eliminated by giving it to the poor without niyyat of thawaab.