Should We Be Concerned About Checking Account Fees Going Up?

MoneyRates.com conducts a semi-annual study on banking trends on checking and Automated Teller Machine (ATM) charges in the U.S.  The latest study was conducted in July 2012 and revealed that checking account fees at banks increased in every major category, compared to December 2011.

Checking account fees increased

The categories in which bank checking fees increased were minimum amount required to open a checking account, monthly service fee, minimum balance required to waive checking account fee, overdraft fees, ATM fees and proportion of checking accounts that were free.

Minimum amount to open a checking account – The average amount required to open a checking account increased from $391.41 in December 2011, compared to $408.76 in July 2012.

Monthly service fee – The average monthly fee was $12.08 in July 2012, compared to $11.28 in December 2011. This is almost $145 per year for checking.

Minimum balance required for no fee – To waive the monthly fee the average checking account balance was $4,446.57 in July 2012, compared to $3,590.83 in December 2011.

Overdraft fees – Overdraft fees averaged $29.83 in July 2012, compared to $29.23 in December 2011.

ATM fees – ATM fees increased for bank customers using out-of-network machines and for non-customers using a bank’s ATM.

Proportion of checking accounts that were free – Approximately 35 percent of the accounts surveyed paid no monthly maintenance fee in July 2012, compared to 39 percent in December 2011.

ATM fees – ATM fees also increased, both for bank customers using out-of-network machines and for non-customers using a bank’s ATM.

Fee differences by bank size and type

Large banks charge a higher monthly fee, a higher average minimum balance to open an account and a higher minimum balance to qualify for free checking.

Small banks offer free checking more often than larger banks.

Online banks charge lower monthly fees than traditional branch banks and require lower account minimums, overdraft fees and ATM fees.

Also, read >  10 Ways to Celebrate Earth Day & Save Money

Large banks’ (more than $25 billion in deposits) average monthly maintenance fee was $13.88; while 21 percent of checking accounts don’t pay a monthly fee.

Medium-sized banks’ (between $5 and $25 billion in deposits) average monthly maintenance fee was $11.17.

Small banks’ (less than $5 billion in deposits) average monthly maintenance fee was $9.87, while 46 percent of checking accounts don’t pay a monthly fee.

67 percent of online banks checking accounts were free compared to 34 percent of those at traditional banks.

“Previous surveys have tended to show more of a mixed bag, with some fees rising and others falling,” noted Richard Barrington, senior financial analyst for MoneyRates.com. “But the latest survey shows a comprehensive trend toward checking accounts becoming more expensive.”

Tips from MoneyRates.com

1. Shop around and compare fees.

2. Consider an online bank, small bank or credit union.

3. Match you needs to the fees. If you overdraw your account, overdraft fees may be more important than monthly fees.

Credit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.