Study Finds Higher Bank Fees in State

Consumers with money market deposit accounts at financial institutions in California continue to pay higher average fees to maintain those and some regular savings accounts, a banking watchdog group said Wednesday. And fewer institutions are offering free regular savings accounts.

San Francisco-based Consumer Action in January surveyed 66 California banks, savings and loans and credit unions and found that their average service fees for money market deposit accounts increased 11%, to an average of $5.41 a month from $4.87 a year earlier.

Money market deposit accounts--offered by banks to compete against money market mutual funds--pay interest rates that are sensitive to money market interest rates. But these accounts usually require higher minimum balances than regular savings accounts and restrict check-writing privileges.

And while the top five banks averaged a steady $4.70 quarterly fee on regular savings accounts, Bank of America increased its quarterly fee 67%, from $3 to $5, the survey said. Republic Federal Savings & Loan raised its $1 monthly fee in 1989 to a $4 quarterly fee in January.

“I don’t see anything on the horizon that will stop these (service) fees from rising,” said Ken McEldowney, Consumer Action’s executive director. He had no explanation for the increases.

Similarly, six banks and thrifts hiked their minimum balances on regular savings accounts almost 77%, to an average of $383.32 from $216.66.

In addition, McEldowney said, fewer banks are offering free regular savings accounts, which could dramatically hurt low- to moderate-income customers. Of those surveyed, only three banks provide them. Last year, seven did.