Some customers will pay hundreds in monthly service fees to have a checking account this year, while others will pay nothing for the same privilege. While this may seem unjust, the customers who enjoy free accounts are probably armed with nothing but better information.
The latest MoneyRates.com Bank Fees Survey -- a semi-annual report that highlights trends in the cost of checking accounts -- indicates that checking accounts continued to get more expensive in the first half of 2013, with more accounts implementing monthly service fees. The average overdraft fee in the survey also rose.
Yet as with previous surveys, the figures suggest that there are still ways savvy consumers can sidestep this trend.
The average monthly service fee is now $12.43, while the average overdraft fee is now $31.60. Based on those average figures, a checking account customer who overdrafts his account three times in the course of a year would pay a total of $243.96 in monthly and overdraft fees for the year.
Despite these heavy costs, there are cheaper alternatives. While free checking accounts -- meaning those that are free of a monthly service fee -- are getting harder to find, they still exist. Of the checking accounts in this survey, 31.30 percent had no monthly service fee. There are also considerable differences in the size of the fees that different banks charge.
Finding free checking and lower fees can be easier if you know where to look, and the survey data suggest that starting your search at certain types of banks may be helpful.
According to the survey data, consumers may pay significantly lower fees by choosing an account from an online bank. Compared to traditional accounts with branch-based service, online accounts are much more likely to be free of monthly maintenance charges. Of the accounts surveyed from online banks, 78.95 percent had no monthly fees. Only 27.79 percent of the accounts at brick-and-mortar banks were free of monthly fees.
Online accounts also posted lower fees than traditional accounts. Among accounts that charge a monthly fee, these fees averaged $9.49 at online banks and $12.48 at traditional banks. Overdraft fees averaged $25.50 at online banks and $31.90 at traditional banks. ATM fees were also lower at online banks.
The size of the bank also impacted average fees in the survey, but these differences are not as overwhelming as the gap between online and traditional accounts.
Large banks tend to charge higher monthly and ATM fees than their smaller and medium-sized counterparts, and are less likely to offer free checking. On the other hand, overdraft fees tend to be lowest at large banks and highest at small banks, with medium-sized banks somewhere in the middle.
Today consumers have many different banks and checking account types to choose from. That degree of choice ultimately empowers consumers, but it can also be a bit confusing. Here are some tips for making sense of the marketplace when comparing checking account terms:
In many cases, the trends in bank fees are going against consumers. But the wide variety of checking accounts available today can help them sidestep many of these growing costs.
The MoneyRates.com Bank Fees Survey is based on the MoneyRates Index, a sampling of 100 banks consisting of the 50 largest U.S. retail banks by deposits, plus 50 smaller banks.