Call it account inflation: A new study shows that checking accounts have gotten even more expensive for customers in 2012, and the phrase “free checking” looks to be going the way of the manual typewriter and the cassette tape.
Consumers saw a brief reprieve at the end of 2011, when rates dropped a bit. Of course, that included the period when anti-bank sentiment boiled over, with Occupy Wall Street protests around the country and major banks backing off plans to implement debit card fees in the wake of widespread discontent. Since then, studies have shown continued dissatisfaction with financial institutions, particularly big banks.
With our collective anger back down to a simmer, however, banks have taken the opportunity to increase both fee amounts and the number of hoops customers must jump through if they want to avoid them. “The latest survey shows a comprehensive trend toward checking accounts becoming more expensive,” says MoneyRates.com, the site that conducts the surveys.
On average, monthly maintenance, ATM and overdraft fees were all hiked this year. Maintenance fees rose to an average $12.08, up from $11.28 in the last survey; at large banks, they rose to $13.88. Meanwhile the average minimum balance required to avoid that fee jumped by $850 — it’s now creeping up on $4,500.
Free checking accounts still exist, but they’re becoming an endangered species; only about 35% of accounts surveyed didn’t include a monthly fee, down from nearly 39% in the last survey. Not only is it harder to find a free checking account, but fee increases have made it more challenging for people — especially those in lower income brackets — to even open one. The average deposit required to open an account broke the $400 barrier, rising to $408.76, up from $391.44 in the last survey.
Overdraft fees are creeping up near the $30 mark (according to other surveys, the average has already breached this threshold.) Banks are charging more for non-customers to use their ATMs, as well as for their customers to use ATMs that aren’t in their network. Between the two fees, you’ll now get hit with an average cost of $3.68. That’s close to 20% if you’re only taking out $20.
The conventional wisdom financial writers usually dole out at the end of a story like this is to look for an alternative institution like an online bank or a credit union. That’s still true, but even this is becoming a little trickier to accomplish.
The MoneyRates survey does show that small banks and online banks charge lower fees than their giant counterparts. For instance, roughly 46% of accounts at small banks carry no monthly maintenance fee, compared to a paltry 21% of accounts at big banks. Even when small banks charge these fees, the cut isn’t as deep, with an average fee of $9.87 at banks with less than $5 billion in assets. Two-thirds of online banks don’t charge a monthly fee at all, but many Americans can’t or won’t give up the brick-and-mortar structure.
According to a new Bankrate.com survey of the 50 largest credit unions, 36 don’t charge monthly maintenance fees. At 72% of the total, that’s a much better ratio, but even this number is falling — in the last survey Bankrate conducted, 38 didn’t charge maintenance fees.