Bank Fees Rising

Oct 1, 2012 by

shawneetown bankAre you finding avoiding bank fees increasingly challenging? You’re not alone. Bank “fee creep” is hitting consumers’ pocketbooks, and the days of “free” checking and the like may be about over.

Bankrate Survey

Personal finance company Bankrate’s annual survey of banks tracks consumer fees. In 2012, Bankrate says almost every checking fee it follows went up, some by 25 percent or more.

Some attempted fee hikes have failed. You may remember the debacle when Bank of America announced a plan to charge customers $5 per month for the privilege of having a debit card. The Bank ultimately backed down, as did a few other institutions planning to follow suit.

But many more fee hikes have stuck. Here’s Bankrate’s rundown:

  • Free Checking  Defined as a checking account with no minimum balance requirement and no monthly fee, 39 percent of banks offered a free checking account in 2012, down from 45 percent in 2011 and 76 percent in 2009.
  • Maintenance Fee  The average monthly “maintenance fee” (on what do you suppose the bank spends money  to “maintain” an account?) for an account paying no interest was $5.48 in 2012, a 25 percent jump from 2011. Many banks forgo the monthly fee if the balance never—for even one second—falls below a minimum requirement during the month. But that minimum is rising—up 23 percent in 2012 to an average of $723.02.
  • ATM Fees  I’ve always been mystified why anyone would use an out-of-network ATM except in an emergency, but many people apparently do because banks reap huge fees for this service. When you use an out-of-network ATM, often you pay two fees: One to the ATM’s owner, and one to your own bank. Both parts are rising, and combined the dual fee in 2012 averaged $4.07. And in 2012, for the first time, Bankrate says every bank in its survey now reports charging a fee when noncustomers use its ATMs.
  • Overdrafts  You don’t want to bounce a check, ever. But if your recordkeeping slips and you accidentally overdraw your account, brace yourself. The average fee from the overdrawer’s bank is $31.26. And if your check is returned unpaid to the merchant, you may get hit with a fee there too.
  • Interest-Bearing Accounts  Banks are hitting customers with a double whammy here. The average interest rate paid for an interest-bearing checking account is 0.05%. Meanwhile, the minimum balance required to avoid the average monthly maintenance fee of $14.75 (which would obliterate any interest earned for most everybody) has roughly doubled, averaging $6,118 in 2012. So to avoid the $14.75 monthly fee, you keep an average of $7,000 in your checking account, earning $35 in interest for the year. Don’t spend it all in one place!

Makes you wonder how so many banks manage to get into such desperate financial straits, doesn’t it?

What to Do?

Have you been hit by more bank fees in the past year? What’s your strategy to keep the fees you pay low, preferably zero? What’s the best bank account deal you’ve seen lately?

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