Checking account costs rise; only 28% are free, study finds

The cost of consumer checking accounts at U.S. banks and thrifts hit new highs during the first six months this year, according to the latest survey of 100 banks by MoneyRates.com.

A twice-yearly report from the personal finance website said average monthly maintenance fees and overdraft protection fees rose. The survey, released Tuesday, also recorded increases in the minimum deposits required to open an account and to qualify for a waiver of the monthly fees.

The availability of free checking accounts, defined as those with no monthly maintenance fees, continued to decline. The percentage of free accounts dropped to 28%, down from 36.6% at the end of 2012 and the lowest share of all checking accounts since the survey began in 2009.

The average monthly maintenance fee rose by 15 cents to $12.69 during the first six months of 2014, meaning it costs the average consumer more than $150 a year just to keep a checking account open, MoneyRates said.

The Foster City, Calif., company surveyed the 50 largest banks that offer retail consumer deposit services, along with a sampling of 25 additional banks with $5 billion to $10 billion in deposits and 25 banks under $5 billion in deposits.

The survey did not address accounts at credit unions, which consumer advocates say are often a good alternative for cost-conscious consumers. Michael Moebs, a banking cost consultant in Lake Bluff, Ill., said nearly two-thirds of credit union checking accounts do not charge monthly fees.

Not surprisingly, large banks with extensive branch systems to maintain generally have higher checking fees. Institutions operating over the Internet are more likely to have free checking, said financial analyst Richard Barrington, a MoneyRates spokesman.

The survey showed that 58% of Internet checking accounts are free of maintenance fees, compared to just 25% of traditional checking accounts. That’s down from a year ago, when nearly 79% of Internet bank checking accounts were free and 28% of traditional accounts had no maintenance charges.

Barrington said he has been surprised by the “inertia” that keeps many consumers from shopping around for cheaper deals at institutions where checking accounts meet their needs -- fee-free accounts for students and seniors, for example, or accounts that are free when bundled with other financial services.

He also recommended that consumers opt out of overdraft protection, saying just five overdrafts typically would cost more than the average maintenance fees for an entire year.

“The first time a purchase is declined can be a shock, but consumers adapt quickly to managing their money more responsibly,” Barrington said.

Here are some details from the survey:

• Overdraft fees were up by 45 cents per transaction, to an average of $32.48.

• The average minimum amount required to open an account rose $6.74 to $400.45.

• The average minimum balance to qualify for a waiver of the monthly maintenance fee rose by $724.69, to $5,440.

• The fee banks charge their own customers for using an out-of-network ATM rose by 7 cents, to an average of $1.52.

• The only area in which fees slipped was in the surcharge banks impose on noncustomers for using their ATMs. This fee fell by 4 cents, to an average of $2.51.

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