Where Are All Those Free Checking Accounts Hiding?

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We keep hearing that free checking is still out there… somewhere. But finding an account with no monthly fee can be a challenge. A new report says free checking accounts still exist, but getting one might mean downsizing. The U.S. Public Interest Research Group looked at 250 banks and found that 60% of small banks have free checking accounts. 

That’s not so bad, but at big banks, that number drops to 25%.

The report also finds that fees for monthly maintenance, overdrafts, and the use of non-network ATMs at small banks are lower, as are the minimum balance requirements to avoid the monthly fee.

Customers at small banks may be able to avoid out-of-network ATM fees entirely, though. The report says that about a quarter of small banks have joined up with multi-bank networks to provide free ATM access outside of the area where their branches are located. Networks like Plus, Smartpass, Presto, and the SUM network offer customers a big-bank perk — convenient free ATM access — without the big bank.

If you still want the convenience of a big bank for other reasons as well as free checking, PIRG says your best shot is to get direct deposit; 59% of big banks waive monthly maintenance fees for people who get direct deposit. Some of these do have minimum amounts that you need to have deposited. Although $250 is pretty common now, PIRG notes that there’s some early experimentation with four-figure minimum deposits.

(MORE: Big Banks Are Finally Making It Easier to Compare Checking Account Fees)

PIRG’s report also finds that customers will probably have a hard time finding out about all of the fees associated with an account. Despite a 1991 law that  requires disclosing all account-related fees to prospective customers, researchers found that not quite half of the banks they studied provided all the relevant fee information on a first visit.

The researchers were persistent, perhaps more so than the average prospective customer might be, and made multiple requests. This got them somewhat better results; 72% of banks eventually provided all the information, but 12% of banks didn’t give them anything (the remainder provided some, but not all, of the information requested).

(MORE: Hey, They Were Listening: Some Banks Reinstate Free Checking)

Although the PIRG report finds that banks can be haphazard about making fee information available, there’s an awful lot of it when they do provide it. The Pew Charitable Trusts found that the median length of checking account disclosures about fees and terms is 69 pages. Yes, that’s huge, but it’s actually down from 111 pages the year before. And there’s been progress in cutting down that thicket of paperwork. Pew suggested a one-page “cliff notes” that highlights the main fees, which several big banks — including BofA, Citibank, TD Bank, Chase and Capital One — have adopted.

But the potential number of fees customers face — even with a free checking account that doesn’t charge a monthly maintenance fee — is practically limitless. Banks can charge fees for just about anything, and some of them do.

Pew found bank accounts with as many as four dozen potential fees attached, some of which climbed into the triple digits. Bankrate.com took a look at some of the weirdest fees out there, and it’s enough to make you want to stick your money back in a piggy bank. The site flags a couple of banks that charge you $5 or $6 if mail they send to you, like paper statements, is returned or undeliverable. Some banks that have online-only accounts will hit you with a fee as high as $10 if you want to conduct a transaction with a human teller.

(MORE: It’s No Coincidence That Changing Banks Is a Huge Pain in the Butt)

And these aren’t even the really good ones. How about a fee for depositing too much cash? Or for redeeming your rewards points? Bankrate uncovers both in its study. One bank charges customers 20 cents per $100 if they deposit more than $10,000. Another charges an annual fee, plus $4 per transaction, for redeeming your rewards points.

Yes, these are outrageous — and uncommon — examples. You’re more likely to get dinged by mundane bank fees if you don’t pay attention to your statements and your spending habits. Oh, and if you plan to storm into your bank in a fit of indignation and close your account, be warned: There might even be a fee for that.

1 comments
Ronnie_Matrix
Ronnie_Matrix

@Bankrate @MarthaCWhite @TIME The days of free checking are almost gone, financial institutions are still the biggest beneficiaries here.