Cost of checking accounts at all-time high

By Mary Ellen Podmolik
Posted Oct. 25, 2010 at 7:58 a.m.

The cost of maintaining a checking account rose to an all-time high this year, with much of the increase coming from the fees assessed to maintain both interest and non-interest-bearing accounts rising 40 percent.

Other cost increases included a 5 percent increase from last year in ATM fees, to an all-time high of $2.33, while the average fee for using an out-of-network ATM was $1.41, rising almost 7 percent, according to a survey released Monday by

Other fees that rose this year included a 3 percent increase in overdraft fees, to a record high of $30.47 and a 4 percent increase, to an average of $13.04 a month, for not maintaining a minimum balance on an interest-bearing checking account.

Altogether, said consumers spend up to $620 a year on avoidable fees.

“A consumer who goes to an out-of-network ATM weekly can save $260 per year by using their bank’s ATM instead,” said Bankrate senior financial analyst Greg McBride in a statement. “Additionally, if that same person avoids one monthly overdraft of a checking account, at $30 each overdraft, they can save another $360. This means a potential savings of $620 annually, all without switching accounts or banks.”

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  1. Nancy Oct. 25, 2010 at 9:09 a.m.

    I certainly agree with this! TCF gave away $50 in groceries at the Jewel’s in Chicago area to get their “free” checking accounts. Then after a few months all of those “free” accounts were changed to a $9.95 monthly charge without a $500 min balance or direct deposit. I wonder how many low income people they snagged with that trick! Both of my banks charge $35 for overdrafts, which is truly insane!

  2. Bill Oct. 25, 2010 at 9:17 a.m.

    Try a credit union. Fees are either eliminated or greatly reduced.

  3. bbnguy815 Oct. 25, 2010 at 9:27 a.m.

    You shouldn’t have to pay for a bank account. Like Bill said, use a credit union. They don’t have these crazy fees and they are much more personable than the big banks.

  4. Pete Oct. 25, 2010 at 9:37 a.m.

    Interest bearing checking accounts are so not worth it. You pay fees for the privilege of earning 0.001% interest on your meager deposits. Unless you keep a LOT of cash in checking, don’t even think of having one of these accounts.

  5. ASDFGHJKL Oct. 25, 2010 at 10:30 a.m.

    Nancy, take responsibility for yourself. You could’ve canceled the account once you find out about the minimum balance. Also, don’t blame the bank for your overdraft. Don’t spend the money you don’t have.

  6. Jerod Oct. 25, 2010 at 10:38 a.m.

    We give OUR money to a bank to (sometimes wrecklessly) invest so THEY can earn money. In return we get TAXABLE interest of 0.5% as well as being nickel-and-dimed for everything else.

    I smell a wide-spread con game that’s going to backfire big time as more and more consumers become more and more angry about being screwed every time we turn around.

  7. Jeff Oct. 25, 2010 at 10:43 a.m.

    You can’t blame the banks when Obama and his cronies made it illegal to charge an overdraft fee. This is just more hope and change hurting responsible accountholders and making life easier for the cheats and scofflaws.

  8. Teekay Oct. 25, 2010 at 10:45 a.m.

    $620 in avoidable fees a year?? People must love giving their money away to banks!! In all the years I’ve had a checking account, I think I’ve paid maybe $1.50 ONCE for using an outside-network ATM in an emergency. Other than that, I’ve never incurred an avoidable bank fee.

    It’s the consumer’s responsibility to read the fine print when opening a new account. There’s almost always a catch.

  9. u505 Oct. 25, 2010 at 10:56 a.m.

    I love it when Nancy comments about the low income folks getting snagged into the trick of signing up for an account. Can’t they read what the sign before they sign it?

  10. Nancy Oct. 25, 2010 at 11:03 a.m.

    OK kids – I take responsibility for myself (thank you ASDFGHJKL) and I don’t have had one overdraft in the past two years but certainly appreciate your concern.
    u505 – the point was that the accounts were free when they opened them and then many months later the fees were put in place. Perhaps you are the one that should learn to read

  11. Nancy Oct. 25, 2010 at 11:04 a.m.

    Before you let me have it again – correction – it should read “I have had one overdraft”

  12. common sense Oct. 25, 2010 at 11:10 a.m.

    1) overdrafting one’s account is irresponsible and ignorant. its akin to getting a speeding ticket, imho. don’t want fees? don’t spend money you don’t have! done.

    2) as a single divorced father of three i’ve never had an avoidable bank fee.

    3) why are checking and savings accounts free anyway? i pay for all other services i consume (even internet access). where is the furor over cel phone charges and satellite/cable television fees? good grief…

    4) @teekay….did you read all the fine print when you bought your car? signed your mortgage? booked that hotel/flight online? purchased life/health insurance? buyer beware is a decades old concept, does anyone really NOT know that?

    5) and life is all about choices. keep the money under your mattress or in your home safe. or go with a community bank (that probably won’t be able to afford all the cost associated with the new federal regulations we all wanted) or a credit union.


  13. kiddenru Oct. 25, 2010 at 11:22 a.m.

    It’s so heartwarming that the banks are showing us how much they appreciated being bailed out.


  14. sweikert Oct. 25, 2010 at 11:32 a.m.

    A couple of people have commented that basically, it’s your own fault if you get hooked into paying fees that you don’t want to pay. To some extent I suppose that’s true. But a lot of times banks change the rules after you’ve signed on with them and then they send you a 5 page explanation that you have to be a lawyer to understand (and maybe not even then). The money you deposit with a bank is loaned out which generates profits to the bank. Seems a little unfair to then charge the depositor for that when it’s their money the banks are making money on. Regarding overdraft fees, with so many bills being paid by automatic checking account deductions it’s pretty hard to keep track of how much you need to have on deposit from day to day. All you can do is keep a cushion in your account, which of course the bank will profit from and still charge you for the privilege of keeping it there.

    And then there’s the blatant gouging – credit card interest rates that are doubled for the flimsiest reasons, fees for every conceivable activity, etc. Just the other day I transferred a credit card balance to another bank to get a lower rate and though the balance showed up on the new account on the 20th, the amount wasn’t credited on the old account til the 21st, which means both banks charged me interest for that one day on that balance. Time to update that old expression – “There is no honor among bankers”.

  15. SO Oct. 25, 2010 at 11:33 a.m.

    Overdrafting is not always ones fault so don’t be blaming people and telling them they are irresponsible and ignorant. Some months the checking account gets low and if you are waiting for your paycheck to be deposited and pay a bill, that you pay every month, sometimes you have to gamble when it will be cashed. If it is cashed before my check comes in it isn’t my fault and I’m not being irresponsible or ignorant. Banks shouldn’t be allowed to charge some of the fees they charge and especially how they charge them. They don’t give any grace period anymore, it is all about the greed on the banks, but yet they were able to be bailed out.

    I think the bailout is the number one reason many are more upset with banks then cell phone fees, etc.

  16. M__M Oct. 25, 2010 at 11:39 a.m.

    “Additionally, if that same person avoids one monthly overdraft of a checking account, at $30 each overdraft, they can save another $360. ”

    Um, what? There are people who average 1 overdraft every single month?

  17. Andrew Metcalfe Oct. 25, 2010 at 11:41 a.m.

    There some odd suggestions in this article, especially around overdrafting. Bank-rate suggesting that money can be saved by avoiding one overdraft per month is ridiculous. Most responsible people go years without ever enduring an overdraft. Sure, sometimes an odd combination of events transpire that result in something unexpected, but these events happen once per decade, not once per month.

    Anyone experiencing overdrafts once per year, never mind once per month as suggested here is badly in need of some financial discipline.

    Am I simply naive to expect that most customers don’t overdraft on a regular basis? Is Bankrate being ridiculous by suggesting such is the norm? Or are American bank customers really that ignorant?

  18. jim Oct. 25, 2010 at 11:59 a.m.

    I like So’s explanation as to why overdraft is not always ones fault, I think his explanation actually proves it is. He says “Some months the checking account gets low and if you are waiting for your paycheck to be deposited and pay a bill, that you pay every month, sometimes you have to gamble when it will be cashed. If it is cashed before my check comes in it isn’t my fault and I’m not being irresponsible or ignorant.” So is he saying this is the banks fault and should front him the money for a day or two?

    Also, why do people refer to it as the bailout? The banks, well the large ones everyone is upset about, paid it back on top of 8% interest in some cases. In my opinoin a bailout is you give money and do not expect it to be repaid. I would agree that american citizen helped out the banks in time of need and loaned them money but did not bail them out.

  19. Riley Oct. 25, 2010 at 12:03 pm

    For all those who think banks are making a lot of money off retail checking accounts: If you leave $1,000 in the account all year and the bank makes 5% (the spread) on that, its only $50. It barely even covers the costs of mailing your statement.

    In the meantime you get a service that is worth much more than that, regardless of what the bank charges you. Free ATM access 24/7, a place for your employer to send your paycheck and a way to basically pay bills for little or no costs.

    Its a BARGAIN for all those who are financially responsible, only those who use overdrafts to finance their lifestyles should have been effected. But thanks to Obama and the Democrats, who say they are out to protect the little guy, the average bank customer gets to pay more.

    Of course overdraft charges are high, they are designed to discourage overdrafts. An overdraft was once perceived as bad, now thanks to the do-gooders its a right of a certain element.

  20. Jim Oct. 25, 2010 at 12:13 pm

    The banks paid back their LOANS, with interest and the Fed made billions. Unlike the auto companies.

    Find another excuse for your own inabilities to mange your finances. I suspect those who are complaining the most are the same ones who walked away from their mortgages.

  21. sharko Oct. 25, 2010 at 12:17 pm

    Anybody still think we don’t need restraints on the financial industry? It doesn’t matter whether or not you’re a right-winger who thinks bank accounts are a BARGAIN, just remember, they’re out to screw you, too. A Bush-style conservative, laissez-faire administration only makes the screwing easier.

  22. Jim Oct. 25, 2010 at 12:40 pm

    The more restrictions and restraints that you all ask for the government to impose on the financial industry to protect all of the ’stupid people’, the more that hard-working, middle of the road Americans end up getting hurt (by fees, onerous approval processes, etc.). Keep asking for Mr. Hopey Changey to help you. Newsflash–he couldn’t care less about my or your well-being (as he simultaneously profits from all of these same institutions that he’s regulating).

  23. Janice Oct. 25, 2010 at 1:50 pm

    Riley you are not entirely correct about banks discouraging over drafts. In fact they were whining a few months ago about the loss of income because people were being more careful and NOT causing overdrafts. Your $1000 average balance you say does not cover costs is also inaccurate. The bank will invest that $1000 (not just loan) and earn more than they pay. Tell the whole story-not just the piece of junk you want the world to believe.

  24. riley Oct. 25, 2010 at 1:50 pm

    If you don’t like it, take your business elsewhere, like the corner loan shark. See what their overdraft fees are.

    Only a mooch expects a business to give away its services for free.

  25. bingo Oct. 25, 2010 at 1:58 pm

    I had to get an $8.00 money order. The bank teller told me it was a $15 fee. He told me if I didn’t want to pay the fee, “go to Wal-Mart, they have cheap money orders…” So I went to Wal-Mart. Got my money order for less than $1.00, probably 50 cents.

  26. Bones Oct. 25, 2010 at 2:40 pm

    Jeff Today at 10:43 a.m.
    You can’t blame the banks when Obama and his cronies made it illegal to charge an overdraft fee. This is just more hope and change hurting responsible accountholders and making life easier for the cheats and scofflaws.

    How misinformed are you Jeff? Illegal to charge overdraft fees? How so? It’s simply not true, in fact if you cared to read the article banks are actually charging more! You’re full of nonsense. Go tell your lies somewhere else.

  27. FastEddie Oct. 25, 2010 at 3:03 pm

    As much as I am for capitalism, the banks are not like any normal for-profit orgization. There has been a reckless push in the past 10-15 years to make these institutions more profitable.

    I believe banks, should serve the public good (not the CEOs – like Jamie Dimon at Chase). I am not proposing banks to become nationalized (like some socialist countries), but certainly we need to return to the roots, which banks were created to serve and facilitae the flow of investment within the local community banking. The large multi-national banks do not serve the local needs, but instead the stockholders.

  28. Nasda Oct. 25, 2010 at 3:41 pm

    So you’ve forgotten that your rent just went out of your account and you’ve written someone a check. Or maybe you just didn’t have the cash to cover it. Your bank is going to charge you an overdraft fee. These economic times aren’t easy for anyone, but for the country’s poorest, they can be especially bad. In an effort to make more money financial institutions like The Bank of America has upped the number of times it can charge someone an overdraft fee from five times a day to 10 times a day (the average overdraft fee is approximately $25). They’ve also instituted a one-time charge of $35 if the account stays in overdraft for over five days. In such troubled times the banks have set out to make a buck off of the most vulnerable population, those who can’t afford to pay

  29. riley Oct. 25, 2010 at 3:46 pm


    Actually, the government did change the rules. Now banks MUST BOUNCE your check unless you explicitly allow them to pay your overdraft, for a fee. Prior to that, they could as a customer service honor the check, except the risk and charge a fair fee. $30-50 was fair not to have your name posted on the wall of the local dry cleaners or grocery store as a deadbeat. While breaking a rule isn’t necessarily illegal, its pretty close in the eyes of a government regulator.

    I don’t know what the big deal is all about, only a few have to worry about it.

    Fast Eddie,
    What do you do for a living? I think you should serve the public good for free.

  30. John Oct. 25, 2010 at 3:57 pm

    riley Today at 1:50 pm
    “If you don’t like it, take your business elsewhere, like the corner loan shark. See what their overdraft fees are.

    Only a mooch expects a business to give away its services for free.”

    Um, they’re supposed to give the service for free, because we switched from the gold standard. The old way of banking use to be that banks couldnt loan/invest money they didnt have. To do business, they all charged people to have bank accounts: a safe place to keep your money, but at a price.

    Then the banks realized they could make far more money if they didnt have to match all the money they loaned/invested (i.e. Fractional-reserve banking). According to the United States’ Federal Reserve, fractional reserve banking provides free bank accounts:

    “The fact that banks are required to keep on hand only a fraction of the funds deposited with them is a function of the banking business. Banks borrow funds from their depositors (those with savings) and in turn lend those funds to the banks’ borrowers (those in need of funds). Banks make money by charging borrowers more for a loan (a higher percentage interest rate) than is paid to depositors for use of their money. If banks did not lend out their available funds after meeting their reserve requirements, depositors might have to pay banks to provide safekeeping services for their money.”
    -Page 57 of ‘The FED today’, a publication on an educational site affiliated with the Federal Reserve Bank of Kansas City)

    If banks want us to pay for their servcies, then we might as well go back to the gold standard.

  31. John Oct. 25, 2010 at 4:29 pm

    An amendment to my last post:

    “If banks want us to pay for their services, then we might as well go back to the gold standard.”

    If banks want us to pay them for their basic services (i.e. safely storing my money, providing me access to my money, etc…), then we might as well be on the gold standard. Every US citizen should have the ability to obtain these basic services at no charge, simply because of the financial system we have in place.

    If I need to get my money at 3am from another state, then I could see paying a charge for that. The current deal of opting for/against overdrafts is acceptable (however, it should probably a lot for the business day to end before a fee could be assessed [i.e. if my grocer cashes my check in the morning and I don’t have the funds, but my paycheck clears in the same business day, no fee should apply]).

    The issue is that banks today provide much more than just a regular banking service. International money market accounts, IRA’s, etc… the bank has gotten itself confused with the stock market, not that there is anything wrong with that, but it has become difficult to regulate them without infringing on the growth of the market. What we need is a clear distinction of basic banking services:

    A non-for-profit wing of the corporate bank to provide basic banking services. Chase-NFP, or Bank of America-NFP, etc… could provide your basic checking account, without ripping you off (because any profit made would be added to your account as a dividend). Then if you utilize their premium services (you want them to manage your retirement account or your car loan), they have free reign to nickel and dime you. But… those services are optional, so you can always just stop doing business with them or switch to a different provider.

    There is a stark difference between ripping off people for a public needed service (i.e. basic banking, basic healthcare, auto liability insurance, food, water, heat, electricity, communication, transportation) because there isn’t the option of not receiving the service. Those services are all needed by everyone. No matter the competition, it is only a matter of time until they combine to only a few providers, and there is little to prevent coercion when profit is at stake. Remove the profit and the only way to stay in business is to deliver exceptional service.

  32. Mark Oct. 25, 2010 at 4:43 pm

    I started using credit union checking around 25 years ago, and would never go back to a bank. The one I use has just one checking account available, and it pays interest on any balance over $5, there is no minimum balance requirement, and no monthly service fees. I do not bounce checks and never use the debit for more than what is in the account. In over two decades, the only fees I have ever paid are for using the debit card at ATM’s, and having checks printed.

  33. Kay Cee Oct. 25, 2010 at 6:03 pm

    That Bankrate senior financial analyst Greg McBride is a genius – you can save $620 a year by avoiding atm fees and 1 overdraft per month. Wait a sec, I can top that: you could save an additional $3600 a year by avoiding making 10 overdrafts per month. Watch out McBride – I’m gunning for your job.

  34. Ed McGuinnes Oct. 25, 2010 at 6:56 pm

    People on this blog who claim “they are taking responsibility for themselves” wholly miss the point.

    Consumers are not lawyers, and these banks are changing the rules midstride. Its called fraud.

    I write consruction contracts and under the law I cannot assume the parties to these contracts are lawyers. Banks should not be afforded any such protections either.

    Consumer contracts that are nothing more then a bag of tricks are a disgrace to our country.

  35. SpotBanks Oct. 25, 2010 at 10:57 pm

    $620 a year on checking account fees?

  36. Informedcustomer Oct. 26, 2010 at 12:18 a.m.

    Some of you people are CRAZY.

    Banks are providing us with service but we’re providing them with something better: MONEY.

    The risk to a bank of opening a new checking account is about $200 (from what my banker friends have told me).

    However, a bank is happy with you having a balance of 5 cents. Why? Because as long as you have SOMETHING sitting in your account, that bank can count it towards deposits.

    Banks are allowed to lend out $7 for every $1 you have deposited. So not only are they lending YOUR money…they’re lending 7X as much and making a hefty profit.

    So to the moron earlier who mentioned a bank only getting $50 dollars on someones $500 deposit – TRY $350! Now THAT’S PROFITABLE – and all the money had to do was sit there.

    Anyway who thinks that people should pay to allow a bank to hold their money is a moron. It’s a symbiosis that’s slowly turning into a parasitic relationship.