An increase in bank checking fees is one of the outcomes of recent consumer protection laws. Learn more.
Banks have raised checking fees by up to 25 percent in attempts to offset revenues curbed by federal consumer protection laws, according to the 2012 Checking Survey released today by Bankrate.com.
This banking “fee-for-all” is an industry response to recent rules limiting consumer overdraft fees and regulations imposing a cap on fees charged for debit card transactions, according to the website.
“That had a drastic kind of an effect on their revenue for retail banking. They need to find a way to make up for these fees in other ways,” Eben Jose, an industry research analyst with IBISWorld, told Bankrate.
The share of banks offering free checking, defined as a checking account with no minimum balance requirements and no monthly fees, continues to decline. Only 39 percent of banks offered free checking in 2012, down from 45 percent in 2011 and substantially lower than 76 percent in 2009, when the share of banks offering free checking peaked, Bankrate reported.
“We continue to see a decline in the availability of free checking. I don’t expect it to reverse anytime soon,” Greg McBride, senior financial analyst for Bankrate, said in a statement. Free checking remains relatively common at smaller community banks and credit unions, according to McBride, who noted that free checking is still offered at 72 percent of the largest credit unions.
Accompanying the decline in free checking is a sharp increase in minimum account balances and checking fees, according to Bankrate. Banks now require customers with noninterest-bearing accounts to maintain an average minimum balance of $723 to avoid a monthly fee, an increase of 23 percent from last year. Minimums at some banks are as high as $5,000. The average fee for maintaining a noninterest-bearing checking account rose to an all-time high of $5.48, an increase of 25 percent.
Out-of-network ATM fees are also on the increase. Banks are now charging a record average of $2.50 for such transactions. Customers are likely to pay their own bank a fee, as well, when they use an out-of-network ATM. The average, $1.57, is up 11 percent from last year. That means a combined average fee of $4.07 for every out-of-network ATM transaction. Overdraft fee rose to a record high average of $31.26, up from $30.83 last year.
Interest-bearing accounts are averaging yields of 0.05 percent, according to Bankrate, but require an average balance of $6,117.80 to waive the monthly maintenance fee. “Interest checking accounts are not an efficient use of cash,” McBride said.