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Community bankers say they'll continue offering free checking for the foreseeable future, even if they're not entirely happy about it. If they followed the big banks by adding fees or changing terms, "we'd lose the accounts," says one local banker.
August 29 -
Wells Fargo & Co. is testing a monthly fee with some customers to offset revenue losses it expects on debit card payments. It said earlier this year that it would make changes because of the Fed's decision to cap interchange rates.
August 17 -
The Federal Reserve Board's proposed debit card interchange rules would slash issuers' revenue by $11.8 billion, a report says.
December 27
Many large financial institutions have eliminated their free checking accounts, and the fees they are charging rose this year, according to new research from Bankrate.com.
Just 45% of noninterest checking accounts are free, down from 65% last year and from the peak of 76% just two years ago, according to Bankrate's 2011 checking account
The web site surveyed the 10 top banks and thrifts in each of 25 large U.S. markets between Aug. 1 and 12. The survey considered one interest and one noninterest account at 247 institutions that offer checking accounts. In total, the survey covered 243 interest and 238 noninterest accounts.
Greg McBride, Bankrate's senior financial analyst, was not surprised by the findings but emphasized there are ways to avoid the fees. "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," he said in a Sept. 26 press release.
Large banks have led the charge to eliminate free checking since the Federal Reserve proposed rules that will cap the revenues they earn from debit interchange fees. But more than 70% of smaller community and regional banks still offer fee-free checking, according to a different survey last month from Moebs Services.
Bankers at smaller institutions say they cannot afford to alienate their customers by
Bankrate found this month that both interest and noninterest checking accounts posted big increases in monthly service fees and the balances required to avoid them. On interest accounts, the average monthly fee is $14.15, up 8.5% from $13.04 last year. The balance required to avoid the fee jumped 43.9%, to $5,587 from $3,883, though these balances are increasingly permitted to be held in other accounts and not strictly in the checking account, according to the release.
On noninterest accounts, the sharp decline in free accounts means 60% more accounts now carry fees and balance requirements. The average monthly fee is $4.37, up 76% from $2.49 last year, and the balance required to avoid it is $585, more than double the $249 from one year ago, the release notes.
Debit card fees remain rare, despite recently publicized cases at large banks including
The city with the highest ATM fees is Denver, averaging $2.75, followed by San Diego at $2.70. The city with the lowest average ATM fee is Cleveland at $2.06, followed by Minneapolis at $2.15.
The average overdraft fee set another record of $30.83, up 1.2% from $30.47 last year.
