Bank checking account
Personal finance reporter
Stricter regulation has forced many banks to reduce the number of checking account charges, but new research shows the fees that do remain have reached record highs.
Fees for using out-of-network ATMs rose 5% over the past year to an average of $4.35, the eighth consecutive year they rose, and have increased 23% over the past five years, according to the latest checking account survey by personal finance website Bankrate.com. That includes fees by the bank and ATM owner. The average overdraft fee also hit record high of $32.74, up 1.7% on last year, the survey found.
Bankrate surveyed 10 banks and thrifts in 25 large U.S. markets — these included savings and loan associations and savings banks. Overall, 242 interest and 238 non-interest accounts were surveyed. The highest average overdraft fees were in Philadelphia ($34.80), Milwaukee ($34.47) and Phoenix ($34.45); the lowest were in San Francisco ($26.74), Los Angeles ($29.47) and San Diego ($30.22).
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Since 2010, federal regulation has required financial institutions to get customer consent before charging overdraft
fees. But overdraft services, which began as “occasional courtesies” offered by banks, still represent over 60% of fees from consumer checking accounts and involve more involuntary account closures, according to a separate 2013 report from the Consumer Financial Protection Bureau.
The bad news: Although 38% of non-interest checking accounts are completely free, that percentage is still unchanged from last year and little changed from 39% in 2012. “This halts a four-year streak of declines from the peak of 76% in 2009,” says Greg McBride, chief financial analyst at Bankrate.com. ATM fees and overdraft fees have shown the most consistent increases over time, he adds.
If certain requirements are met, such as direct deposit, maintaining a minimum balance and/or using the account to pay bills, however, customers can avoid such fees. But banks are gradually raising the bar on these exemptions too, the Bankrate survey found. For example, account holders must meet a minimum balance of $6,211 on average to avoid fees on interest checking accounts, up 7% from last year.
The percentage of bank accounts that paid no monthly service fees fell to 27.6% last month from 30.3% a year earlier, according to a survey by Moebs Financial Services, an economic-research firm in Lake Bluff, Ill. But a recent survey by the American Bankers Association said that the majority of Americans (62%) actually pay no checking account maintenance and ATM access fees at all.