Free or Low-Cost Checking Exists, Bank Poll Finds

Free or low-cost checking accounts are still available at many California savings institutions, particularly for senior citizens, but low-income consumers may find it hard to qualify for some, according to a new survey to be released today.

Meanwhile, monthly service fees and other charges on checking accounts overall have continued to rise and vary considerably among institutions, says the annual survey by Consumer Action, a nonprofit organization based in San Francisco.

“The survey indicates that by shopping around, consumers will be able to significantly cut the fees they pay,” Ken McEldowney, executive director of Consumer Action, said.

The survey also illustrates how certain basic banking services--once taken for granted as free or low-cost before banking deregulation in the early 1980s--now cost more and have more restrictions. Institutions now can pay interest on checking accounts and are no longer willing to subsidize the costs of administering them.

Tougher for the Poor

Consumer Action found that, as of Jan. 15, 33 of the 80 California banks and savings and loan firms surveyed offered one or more checking accounts for the general consumer that met the group’s criteria for low-cost or free checking. The criteria: having a minimum opening deposit of no more than $300 and having a service charge of no more than $4 a month for a consumer unable to meet any minimum balance requirement and who writes no more than eight checks a month.

The incidence of such free or low-cost accounts was about the same as Consumer Action found in its survey a year ago .

Three accounts come with no fees at all. They are offered by Eureka Federal Savings, San Francisco Federal Savings and Barbary Coast National Bank, all based in Northern California.

Elderly or disabled consumers may find it easier than others to find free checking. The survey found that 63 institutions offer at least one type of free checking account to senior citizens (minimum age to qualify varied from 55 to 63). Eleven offer at least one type of free account to disabled persons.

However, 13 of the 35 free or low-cost accounts available to all consumers require that canceled checks not be returned with the statement or that automated teller machines be used instead of live tellers.

The survey also found that 19 of the 80 institutions surveyed require prospective customers to provide a credit card as identification in order to open a checking account. That requirement constitutes a “not-too-subtle form of economic discrimination,” Consumer Action’s McEldowney said, contending that many low-income consumers cannot get credit cards.

However, banking officials took exception to that survey finding, contending that in fact credit cards are only one of several forms of acceptable identification required to open a checking account.

Nancy Sheppard, director of communications for the California Bankers Assn., which represents 460 banks statewide, said that to her knowledge none of its member institutions requires a credit card. Instead, she said, they are willing to accept other forms of identification, such as drivers licenses, Social Security cards or passports.

“We don’t want to discriminate against people on an arbitrary basis,” Sheppard said, noting that the issue also came up two years ago, when member banks were encouraged to make sure that it was not their policy to require credit cards.

McEldowney noted that consumers may be able to get around the credit card requirement by being persistent.

“The consumer, upon being told of the credit card requirement, should push very hard in hopes of getting an alternative ID accepted,” McEldowney said.

The survey also found that about one in four institutions had raised fees on interest-bearing checking accounts in the past year, McEldowney said. And fees varied widely, with some basing fees on the number of checks written, while others waived fees if depositors meet minimum balance requirements.

The survey is available at no charge to consumers who send a legal-sized, self-addressed envelope with 56 cents in postage to: Consumer Action Checking Survey, 693 Mission St., San Francisco, Calif. 94105.

LOW-COST CALIFORNIA CHECKING ACCOUNTS

These non-interest-bearing checking accounts have opening deposit requirements of no more than $300 and fees of no more than $4 per month when a maximum of eight checks are written per statement period. Some have special limitations. Interest-bearing accounts are not listed.

NA (not applicable) means that fees apply at any balance. At Republic Federal, for instance, the charge of 35 cents per check applies no matter how much money a customer has in an account. At Santa Barbara S&L;, the checking fee of $4 per month is waived for a customer with a balance of $100 or more.

Min. balance Institution to avoid fees Alameda 1st Nat. Bank NA Bank of America $500 Bank of Contra Costa NA Bank of the West NA Citicorp S&L; NA City Federal S&L; $100 Eureka Federal S&L; No fee First Nationwide SB $500 Gibraltar S&L; $250** Gibraltar, 2nd Acct. NA Glendale Federal S&L; $500 Mitsubishi Bank $500** Northbay S&L; NA Placer S&L; NA Republic Federal S&L; NA San Francisco Federal S&L; No fee Santa Barbara S&L; $100 Southern Calif. Bank NA Sumitomo Bank NA Valley National Bank $1,000 Valley National, 2nd Acct. NA Wells Fargo Bank NA

Institution Fees Alameda 1st Nat. Bank $2.50/mo. + 50 per check over 10 Bank of America $2.50/mo. + 50 per check over 8 Bank of Contra Costa $3.50/mo. + 50 per check over 10 Bank of the West $2.50/mo.* Citicorp S&L; 75 per check over 4 City Federal S&L; 50 per check Eureka Federal S&L; No fee First Nationwide SB $3.00/mo. Gibraltar S&L; 50/mo. + 25 per check* Gibraltar, 2nd Acct. $3.00/mo.* Glendale Federal S&L; $3.00/mo. Mitsubishi Bank $2.50/mo. + 18 per check Northbay S&L; $3.00/mo. Placer S&L; 15 per check over 15 Republic Federal S&L; 35 per check San Francisco Federal S&L; No fee Santa Barbara S&L; $4.00/mo. Southern Calif. Bank $2.50/mo. + 50 per check or ATM Sumitomo Bank 50 per check Valley National Bank 25 per check Valley National, 2nd Acct. 50 per check Wells Fargo Bank $3.50/mo.*

* Additional fees incurred for transactions not made at automatic teller machines.

** Or $1,000 average balance during statement period.

Source: Consumer Action; data last updated in January.