Bank fees rise again
A new survey shows that small banks are much more likely than big banks to offer free checking accounts.
This post comes from Richard Barrington at partner site MoneyRates.com.
That's the principal finding of the latest MoneyRates.com Bank Fees Survey, a semiannual study that examines banking costs across the country to reveal trends in checking account and ATM charges. The latest data, which MoneyRates.com collected in July, suggest that the fee environment worsened for bank customers in virtually every way possible in the first half of the year.
However, the results also indicate that consumers still have several options for combating these costs. The following are some notable trends in bank fees -- and what consumers can do about them.
Checking fees rise across the board
Compared with the end-of-year 2011 Bank Fees Survey, average checking account fees rose in every major category tracked:
- Minimum required to open an account. The average amount required to open a checking account was $408.76 in this survey, up from $391.41 in the previous one. The higher this minimum becomes, the more poorer customers may be forced to go unbanked.
- Monthly service fees. Among banks that charge a monthly fee, the average cost was $12.08, up from $11.28. At a total of nearly $145 per year, these monthly maintenance fees can take a serious bite out of your account balance.
- Minimum balance for fee waiver. Banks will often waive the monthly fee for customers with more on deposit, but the amount you have to keep in your account to get this waiver is going up. The data show an average of $4,446.57 to get a monthly fee waived, up from $3,590.83.
- Overdraft fees. Overdraft fees jumped to an average of $29.83, up from $29.23.
- Percentage of accounts offering free checking. Contrary to many reports, free checking is not dead, but it is becoming more scarce. Only 35.3% of the accounts surveyed were free of a monthly maintenance fee, down from 38.8%.
- ATM fees. ATM fees also increased, both for bank customers using out-of-network machines and for non-customers using a bank's ATM.
Previous surveys have tended to show more of a mixed bag, with some fees rising and others falling. But the latest survey shows a comprehensive trend toward checking accounts becoming more expensive. (Post continues below video.)
Differences by size and type of bank
While the trend toward higher fees seems decisive, it is by no means universal. The average fees in the survey varied widely among different sizes and types of banks.
The average monthly maintenance fee was $13.88 at large banks (those with more than $25 billion in deposits) while it was only $9.87 at small banks (those with less than $5 billion in deposits). At medium-sized banks, the average monthly maintenance fee fit in between at $11.17. The average minimums to open an account and to qualify for a fee waiver were also higher among the large banks surveyed.
Results indicate that small banks are much more likely to offer free checking, too. There was no monthly maintenance fee for 45.8% of the accounts at small banks in the survey, whereas only 21% of the accounts at large banks were free of those fees.
online checking accounts were free of monthly maintenance fees, compared with just 34% of those offered by traditional banks. The online banks that do charge monthly fees also tended to charge lower amounts than traditional banks, and their average account minimums, overdraft fees and ATM fees were lower too.
Here are four tips to help you avoid the jump in charges:
- Shop around. There is huge variation in bank fees, so shopping around can make a big difference. More than a third of checking accounts still do not charge a monthly maintenance fee, which can save you hundreds of dollars each year.
- Consider an online bank. Given the clear cost advantage of online banks in the survey, switching to one may offer much needed relief if you are fed up with fees.
- Think small. If you don't want to bank online, you may want to focus on smaller banks, since they offered several price advantages over their larger counterparts in this survey.
- Match your needs with a bank's fees. When comparing banks, consider your banking habits. For example, if you have a tendency to overdraw your account, the size of overdraft fees may matter more than monthly maintenance fees.
While this survey suggests a clear pattern toward rising fees, you can still buck this trend by doing your research. Comparing fee disclosures takes some work, but when it leads to saving month after month, the effort is likely to prove worth it.
More from MoneyRates.com and MSN Money:
The author left out the most obvious and simple way to avoid Big Bank GREED. My Wife and I have 6 credit union accounts (4 personal, 2 business) at 2 different credit unions.
Total fees paid in 2011 for all 6 accounts? ZERO. Minimum balance to open a Checking account? ZERO (Savings Account required). Minimum balance to open a savings account? Five Dollars. Minimum balance for fee wavier? NO FEES to need a waiver for.
Oh, wait. The author must be paid/funded by big banks to write this because NO WHERE is credit union mentioned.
DUMP YOUR BANK. You don't need them and they certainly don't want you, unless your net worth is mid 6 figures or higher. They have to make enough money off you in fees and on your money to pay out BILLIONS in bonuses to their top FAT PIGS each year.
That is one form of high jacking a customer. Keep slapping fee's on customers money the bank that lends out at high interest rates on your money. I'm getting fed up with my bank! Now they want me to change how my pay check is directly deposisted? Really???
Ok Mr Big coperate bank your asking for it. Pretty soon more people are heading to local banks or stuffing money in coffee can's or under the bed. Oh and you want me to set up automatic bill pay? Why? Wake up, not every company is on board with this! Enough is enough!!!
cu is the way to go...that has been my bank for 28 yrs....
no fees, better interest rates for your accounts as well as for loans...
banks will never learn that they are not the "best" anymore...
For all you B of A people if you want to get a living will document notarized and the words "being of sound mind" is on your document they say it's a state law that they cannot notarize the document with that on it. I talked to the State of AZ and they said there is no such law and they should not be reading the documents. So B of A is in violation of a state law to save $5. More to come.
not for me. I do not let the banks rip me off. there are other alternatives that actualy do not affect credit in any way. to those of you being riped off by banks it is your own fault.
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