NEW YORK, Sept. 26, 2007 /PRNewswire-FirstCall/ — Bankrate, Inc.announced today that banking fees have hit all-time highs in several
areas, including ATM surcharges ($1.78 up from $1.64), bounced check
fees ($28.32 up from $27.40) and monthly service fees on interest
checking accounts ($11.72 up from $10.74). The research is compiled in
Bankrate's fall 2007 Checking Study, which surveys recent trends in
banking fees, including interest and non-interest bearing checking
accounts, ATM fees and bounced check charges. To view the complete
study, go to www.bankrate.com/checkingstudy.
How much can additional fees cost you? Greg McBride, CFA, senior
financial analyst at Bankrate.com offers the following examples:
— Make one ATM withdrawal per week from another bank's ATM — paying a $2 surcharge and $1.25 fee to your own bank — costs a total of $169 over the course of one year.
— Overdrawing your checking account or bouncing a check just 4 times per year is throwing away more than $100 annually, not including any additional fees charged by the merchant.
— Interest checking accounts can cost you dearly. Fail to maintain the required balance and you'll be docked an average of $11.72 each month. This adds up to $140 per year, and is completely avoidable by getting a free checking account.
Key Findings of the Study are:
— The average bounced check fee hits a record high of $28.23.
— The average ATM surcharge hits a new high of $1.78
— The most prevalent ATM surcharge is now $2.00, up from $1.50 in previous surveys
— The ATM surcharge is assessed by 99 percent of the banks in the survey
— It takes an average of nearly $1,000 to open a checking account and earn interest
— The average balance required to avoid fees on an interest checking account is now more than $3,300
— 68 percent on non-interest checking accounts have no monthly service fee or balance requirement
— Online banks are offering free checking accounts with yields as high as 5%.
— The fee charged by banks when their customers go to another bank's ATM remains the lowest since 2002 at $1.25
Checking Accounts—Average Yield
The average yield on interest checking accounts ticked lower since
last year, from 0.34 percent to 0.32 percent. Yields for interest
checking accounts have been perpetually relegated to the cellar, a fact
evidenced by the dreadfully low interest payouts in recent years
regardless of whether interest rates were rising or falling. The
ultra-low yield is not justification for letting a large balance pile
up.
Checking Accounts—Minimum to Open and Earn Interest — record high!
The average minimum deposit to open an account and earn interest
jumped a staggering 60 percent, from $615.41 one year ago to $986.19 in
the current survey. Furthermore, the average minimum to open the
account and earn interest has more than doubled from $429.76 just 18
months ago. After remaining steady for a number of years, the opening
balance has kicked into overdrive since the Spring 2006 survey. Why?
While you may be able to open the account for a more modest sum, banks
are raising the threshold it takes to earn the stated rate of interest.
Although the number of banks increasing the minimum outnumbered those
decreasing it by a count of 17-12, those that increased did so in an
exponential fashion. What results is a much higher initial deposit to
earn interest.
Checking Accounts—Minimum to Open a Non-Interest Account
The average minimum deposit required to open a non-interest account
slid from $87.67 to $83.02 since last year. Although this is still the
second highest ever found in the survey, the amount has always been a
comparatively modest sum relative to interest-bearing accounts. There
weren't many movers in this survey, with just 10 institutions changing
their requirement since the last survey.
Checking Accounts—Minimum Balance Required to Avoid Fees — Interest Account — record high!
The balance that accountholders must keep to avoid fees on interest
accounts continues to increase to stratospheric levels. Since last
year's survey, the average balance requirement to avoid fees on an
interest account jumped almost 25 percent, from $2,660.49 to $3,316.60.
Imagine keeping more than $3,300 in a low yielding account just to
avoid fees! There were 31 banks increasing the balance requirement and
just 9 decreasing it since the last survey.
Checking Accounts—Minimum Balance Required to Avoid Fees — Non-Interest Account — record low!
The average balance requirement to avoid fees in a non-interest
account fell for the fourth consecutive survey, dropping to a record
low of $155.49. This is in stark contrast to interest-bearing checking
accounts. Of the 226 non-interest accounts surveyed, 154 accounts (68
percent) have no balance requirement at all — a hallmark of free
checking accounts.
Checking Accounts—Average Monthly Service Fee — Interest Account — record high!
The average monthly service fee jumped nearly $1.00 per month, from
$10.74 to a new high of $11.72 since the last survey. Of the 247
interest accounts in the survey, 235 (95 percent) charge a monthly
service fee. And the list of banks increasing versus decreasing the fee
since the last survey is as lopsided as a bad college football game —
47 to 5!
Checking Accounts—Average Monthly Service Fee — Non-Interest Account — record low!
For non-interest accounts, the average monthly service fee fell for
the fifteenth time in the 17 editions of the survey. The average
monthly service fee is now $2.26, down from $2.52 one year ago. Just 71
of the 226 non- interest account surveyed charge a monthly fee.
Checking Accounts—Average Bounced Check Fee — record high!
The average cost of a bounced check, referred to as a non-sufficient
funds fee or NSF fee, climbed 3 percent to a new record high of $28.23.
This is the second survey in a row where the average has hit new
heights. The move higher was lopsided, with 88 banks increasing the fee
against just 19 that reduced the fee in the past year. One final point,
the survey gathers the cost of the first bounced check and with the use
of tiered structures by some banks, the cost of overdrawing an account
can quickly escalate.
Checking Accounts—Online Access Availability
The percentage of accounts offering online access has plateaued at
the 98 percent mark, where it has resided for the past two years. While
there hasn't been much change in recent years, the availability of
online access is up from 89 percent in 2001.
ATM Fees—ATM Surcharge — record high!
The average surcharge, the fee ATM owners charge non-accountholders
to use the ATM, established a new high for the fourth consecutive
survey, jumping from $1.64 to $1.78 in the past year. The trend toward
higher fees is unmistakable, with 43 institutions raising their
surcharge in the past year versus just three that reduced the fee. The
$2 fee is now the most common, but the fee stretches higher, with 22
banks charging more than that. This is up from four banks one year ago,
and includes Bank of America moving to the $3 threshold. The survey was
conducted as of July 31, and at the time Bank of America had only
instituted the higher surcharge in some of their markets. The remainder
went into effect at the end of August.
ATM Fees—Percentage of Bank-Owned ATMs with Surcharges — record high!
Not only has the average surcharge grown, but so too has the
prevalence with which the fee is assessed. As of the current survey, 99
percent of banks with ATMs — yes, 99 percent — charge non-customers
for using the bank's ATMs. The bottom line is that if you plan to use
another bank's ATM, expect to pay and pay handsomely for the privilege.
ATM Fees—Fee to Use Non-Bank ATM
It isn't all doom and gloom on the ATM front. The average fee
charged by banks when their own customers use another bank's ATM held
steady at $1.25. This remains the lowest since 2002. The trend of the
past couple years has been to enhance customer satisfaction by
providing free or lower-cost access to non-bank ATMs. However, the
fee-friendly policies often debut as a feature of certain accounts,
rather than a bank-wide policy, though more banks are now instituting
it across both interest and non-interest accounts. This doesn't erase
the customer's exposure to the ATM surcharge, so it still isn't the
equivalent of a free ATM withdrawal unless the bank has a reimbursement
policy in place for ATM surcharges.
ATM Fees—Annualized Cost of ATM Transaction Fees — record high!
Due to the surging surcharge and the near-universal application of
the fee to non-accountholders, Bankrate.com estimates — using GAO data
on the number of ATMs and non-accountholder transaction volume — that
consumers will pay nearly $4.4 billion in ATM fees in 2007. Actual fees
incurred by consumers could vary considerably from this estimate if
actual behavior differs from the previous GAO findings on
non-accountholder ATM usage.
Internet Banks
For comparison, Bankrate.com looks at a selection of checking
accounts offered by internet banks. In this edition, 16 internet
institutions were surveyed, with 16 interest accounts and 6
non-interest accounts being included. Because interest checking
accounts are offered by each of the internet banks surveyed, and
because of the limited number of non-interest accounts they offer, the
focus of comparison will be on interest accounts. Here is a look at how
the interest checking accounts at internet banks stack up against what
is available at traditional brick-and-mortar banks.
Internet Banks—Minimum to Open
The stark contrast in minimum opening balances required for
interest- bearing accounts compared to non-interest accounts holds true
at both traditional and internet banks. In both cases, non-interest
accounts can be opened for a fraction of what it takes to open an
interest-bearing account and earn the stated return. However, the
minimum to open and earn interest at an internet bank, $572.13 on
average, is considerably lower than the average of $986.19 at
brick-and-mortar banks.
Internet Banks—Average Yield
The average yield at internet banks continues to dwarf that of
traditional banks, 2.7 percent versus a paltry 0.32 percent. Since
bottoming at 0.84 percent in the Spring 2004 version of the survey, the
average yield at internet banks has increased for six consecutive
surveys, rising from 2.25 percent to 2.7 percent since the previous
survey last year.
Internet Banks—Minimum to Avoid Fees
Another big difference between internet banks and traditional banks
is the balance required to avoid fees on interest-bearing accounts. At
traditional banks, the average is a nearly-insurmountable $3,316.60
while internet banks require a more reasonable $562.50. While the
average balance requirement at traditional banks soared in the time
since the last survey, the average balance requirement for interest
checking accounts at internet banks dipped from $571.43 last year and
has fallen mightily from the high of $2,454.55 two years ago.
Internet Banks—Monthly Service Fee
The average monthly service fee on interest checking accounts at
internet banks has fallen notably from $6.05 two years ago and $4.31
last year to a record low of $2.91 this year. Contrast that with the
average at traditional banks that has ballooned to a new high of $11.72
in the most recent survey.
Internet Banks—Bounced Check Fee
Bouncing checks is costly, regardless of where you bank. Although
the average bounced check fee at internet banks is lower, $25.23
compared to $28.23 at traditional banks, consumers using bounced check
fees as a basis for comparison shopping have bigger issues. It is best
to avoid bounced checks by keeping accurate tabs on your available
balance before initiating any payments.
Bankrate.com surveyed one interest and one non-interest checking
account at the largest banks and thrifts in each of 25 large markets to
find the latest trends on checking account and ATM fees. The offerings
of 249 institutions were surveyed, with 247 interest accounts and 226
non-interest accounts in the survey. Bankrate.com also looked at the
checking accounts of 16 internet banks to see how those offerings stack
up against their brick-and- mortar counterparts.
