The Fall 2006 Checking Account Pricing Study, a survey conducted by Bankrate.com, found that some customer fees and requirements hit record highs.
"What makes these fees especially irritating is that they're avoidable," according to Greg McBride, senior financial analyst for Bankrate.com. "It's something that pops up and bites you when you're not careful."
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Average Automated Teller Machine (ATM) fees charged users of machines at banks where users do not have an account, were a record $1.64, up a dime in a year. Although six banks reduced fees, 22 banks increased the amount, bringing the number of banks with ATMs that charge users to a record 98.3 percent. A lower percentage of banks-77 percent- are assessing fees on their customers who use other bank's ATMs and maintain a minimum balance on an interest account. Using numbers from the General Accounting Office (GAO), Bankrate.com estimated that customers would pay a total of $4.2 billion for non-bank ATM withdrawals in 2006, a slight drop from 2005
There is no better news concerning minimum opening deposits, which rose to record highs on both types of accounts, with interest accounts getting hit the hardest, at a 43 percent increase, up to an average $615.41. Non-interest account opening balances, although only $87.67, still posted a 21 percent increase, with an average $209.72 required minimum balance. This is the second lowest number ever found by the survey. Monthly fees for these accounts are also at a record low.
The balance requirement to earn interest and avoid fees is a whopping $2,660. The recent string of rate hikes is not reflected in the dismal 0.34 percent yield. Bankrate.com states "there is no need to maintain a large balance in a low yielding account when so many checking accounts come without balance requirements or fees."
Fees on bounced checks, non-sufficient fund (NSF) checks, hit a record high average $27.40, with 85 banks posting increases and 32 decreasing account fees. AccountingWEB contacted customer service agents at various banks and discovered that fee policies vary and it is wise to check the policy in the city and state in which the account was opened. If the account remains negative for a certain number of days, either a one time or a daily fee may be assessed, depending on the bank policy.
To earn interest at an online bank and avoid checking fees, it costs about half the balance required at a regular bank, but the initial opening balance is higher, at $605. The monthly service charge is also about half, $5.50 compared to $10.74. Although the online interest rate is higher, Bankrate.com maintains neither rate seems worth tying up the money which could yield more invested in other places.
The general advice to avoid fees is to shop around and check out all of the fees at a bank before opening an account, choose an account that fits individual needs, maintain minimum balances if required and keep track of balances, including checks written and any money withdrawn from the account through ATMs or account debit cards. This way the money will remain in your account and not on the banks profit statement.
The North Palm Beach online financial service surveyed 248 large banks and thrifts offering checking accounts, with 215 non-interest accounts and 247 interest accounts evaluated, using one non-interest and one interest checking account each, in 25 large U.S. markets.