Survey: Free checking scarcer, while bank fees are up sharply – Orlando Sentinel
Fewer than half of all non-interest checking accounts offered by U.S. banks are now free, down sharply from last year and the year before, according to an annual survey by Bankrate Inc.
Because federal financial-service reforms are cutting into banks’ fee income from overdraft-protection services and debit-card transactions, the number of non-interest checking accounts offered without monthly maintenance fees has dropped from 76 percent in 2009 and 65 percent in 2010 to just 45 percent this year, according to the new survey, which looked at 10 banks or thrifts in each of 25 of the nation’s largest metropolitan areas.
The good news is that, while free checking with no strings attached is in decline, the overwhelming majority of accounts available — nine of every 10 — have waivers available to avoid monthly fees, said Bankrate, a North Palm Beach consumer-finance research business. In other words, banks are still willing to give you free checking in exchange for such things as direct deposit of your paychecks or a higher-than-average account balance.
“The decline of free checking is in full swing. However, savvy consumers can take advantage of an increasing amount of fee waivers, most commonly with direct deposit,” said Greg McBride, Bankrate’s senior financial analyst. “Ninety-two percent of non-interest accounts are either free or can become free.”
Both interest-bearing and non-interest checking accounts imposed big increases during the past year in their monthly service fees, and on the balances required to avoid them, the Bankrate survey found.
On interest accounts, the average monthly fee was $14.15, up 8.5 percent from last year. And the average minimum balance required to avoid a fee jumped 44 percent, to $5,587 from $3,883 a year ago, though more banks are allowing these balances to be held in other accounts, not just in the checking account, Bankrate said.
On non-interest accounts, the average monthly fee jumped 76 percent to $4.37, compared with $2.49 last year; the average minimum balance to avoid the fee is now $585, more than double last year’s $249.
Debit-card fees are still rare, despite recently publicized cases, according to Bankrate. Only 4 percent of the accounts surveyed charge a point-of-sale fee when using a debit card, and less than 2 percent charge a monthly or annual fee.
But that’s changing quickly, especially among banks with sizable operations in Central Florida. Just this week, Bank of America joined the growing list of banks that will soon begin charging a $5-a-month fee if a customers uses a debit card for a point-of-sale purchase even once. SunTrust is adding the charge unless a certain account balance is maintained; Regions Bank’s $4-a-month fee kicks in today; Wells Fargo is testing a $3 fee in five states (though not Florida); and JPMorgan Chase is testing a $5 fee in Wisconsin.
ATM withdrawals do not trigger these new debit-card fees, but Bankrate said the average ATM surcharge hit a new high in its latest survey for a seventh straight year: $2.40, up 3 percent from 2010. The average fee charged by one’s own financial institution for going outside its ATM network was unchanged, at $1.41 per transaction.
The average nonsufficient-funds fee, also known as an overdraft or bounced-check fee, also set another record this year: $30.83, up 1 percent. It has risen every year since Bankrate began its survey in 1998.