New bank fees are making checking accounts more expensive, but savvy consumers can find ways to avoid them.
A recently imposed cap on debit card transaction fees appears to be hastening the demise of free checking at the nation’s largest banks, but consumers willing to change their habits - or financial institution - are likely to avoid the new bank fees.
A survey released yesterday by the website Bankrate.com shows the percentage of free non-interest checking accounts has fallen from a peak of 76 percent two years ago to 45 percent this year. The 2011 Checking Study also found big increases in monthly service fees and the minimum account balances required to avoid them.
“The decline of free checking is in full swing, however, savvy consumers can take advantage of an increasing amount of fee waivers, most commonly with direct deposit,” said Greg McBride, senior financial analyst for Bankrate.
Interest accounts have raised average monthly fees from about $13 to $14.15, an increase of 8.5 percent from last year. The average minimum balance required to avoid the new bank fees jumped nearly 44 percent, to $5,587 from $3,883, though an increasing number of banks are allowing the deposits to be held in accounts other than the checking account.
Non-interest accounts have raised their average monthly fees from $2.49 last year to $4.37 this year. The minimum balance required to avoid the new bank fees more than doubled from $249 last year to $585 this year.
Overdraft fees rose to a record $30.83, up 1 percent from $30.47 last year. A small minority of banks are charging debit card fees, according to the survey. Only 4 percent of accounts charge a fee at the point of sale, and fewer than 2 percent charge monthly or annual fees for carrying a debit card.
Consumers seeking free checking may turn increasingly to small banks, credit unions and on-line banks. Many continue to offer free checking with unlimited check writing, online bill paying and telephone transactions, according to Consumer Reports, which notes that the majority of the nation’s largest credit unions offer no-strings free-checking.
Most bank customers - 71 percent - are finding a way to avoid bank fees, according to a survey released earlier this month by the American Bankers Association, and 11 percent of consumers spend $3 or less in monthly bank fees, including checking account maintenance and ATM access.
“It’s impressive that so many customers avoid paying any bank fees,” said Nessa Feddis, vice president for the bankers association. “It shows than consumers are savvy and able to navigate the new banking landscape with skill. Often, avoiding bank fees can be as simple as maintaining a minimum balance or accepting a paycheck by direct deposit.”