By Jeff Ostrowski Palm Beach Post Staff WriterUpdated: 9:49 p.m. Saturday, March 26, 2011
Posted: 7:33 p.m. Saturday, March 26, 2011
Big banks are boosting fees, a trend that has savvy consumers seeking ways to avoid ever-rising charges for checking accounts and ATM transactions.
Luckily for bank customers, it's not difficult to avoid fees. Many banks waive fees for customers who have automatic deposits made to their accounts electronically, who maintain minimum balances that can be as low as $100, or who have multiple accounts and loans.
"Just because your bank is instituting a fee doesn't necessarily mean you're going to get stuck paying it," said Greg McBride, a senior financial analyst at Bankrate.com in North Palm Beach.
As banks emerged from the financial crisis of 2008 and 2009, many made up for lost income from lower loan volumes by raising service charges on depositors, banking analysts say. New regulations on overdrafts and debit card fees also are pushing up other fees.
The average overdraft fee hit an all-time high of $30.47 in 2010, and the typical ATM charge reached a record $2.33, according to Bankrate.com . ATM fees are expected to keep rising - banking giant Chase is testing fees of $5 in Illinois and $4 in Texas for customers of other banks who use Chase ATMs. (The fee in Florida is still $3.)
Meanwhile, free checking is slowly disappearing as banks impose more restrictions on no-fee accounts. Only 65 percent of banks offered free checking last year, down from 76 percent in 2009, according to Bankrate. And the average monthly fee for no-interest checking accounts rose to $2.49 last year, a 40 percent increase.
"Many of the banks that jumped on the free-checking bandwagon in recent years are now jumping off," McBride said.
Some banks that marketed consumer-friendly fees have failed. Washington Mutual - which wooed customers in Palm Beach County and the Treasure Coast with free checking and low ATM fees - collapsed in the mortgage meltdown and was taken over by Chase.
Riverside National Bank of Fort Pierce - which touted "Lifetime Free Checking" - also failed. Its new owner, TD Bank, now requires a $100 minimum balance for its basic checking account, and imposes a $15 fee if the depositor's balance falls below $100.
As TD Bank's $100 minimum shows, service charges can be steep, but the hurdles for avoiding bank fees aren't exactly high.
Even so, one big bank already has begun charging some customers for such things as transactions at teller windows. Bank of America's "eBanking" account requires depositors to do virtually all their banking online or through ATMs. Receiving paper statements or talking to a teller triggers an $8.95 monthly fee.
Consumers who are annoyed by such fees are likely to pull their money from big banks and move to community banks and credit unions, analysts say. A Bankrate survey released Monday found 64 percent of Americans would consider switching banks to avoid higher fees.
"The consumer is going to say, 'I'm moving away from the big guys. They're charging too much,' " said Michael Moebs, an economist in Lake Bluff, Ill., who studies bank fees.
Credit unions offer one alternative. They don't aim to turn a profit, don't pay income taxes and are known for low fees. West Palm Beach-based Gold Coast Federal Credit Union, for instance, charges only $5 for overdrafts, President Robert Delaney said.
Community bankers also aim to win business from the big banks by advertising free checking. Palm Beach Community Bank of West Palm Beach offers free checking, and although it imposes overdraft charges, it rarely collects them, President Cal Cearley said.
"We charge so few fees," Cearley said.
One happy reality for Palm Beach County residents seeking to avoid fees: Banks engage in fierce competition for deposits here.
Fifty-eight banks operated branches in Palm Beach County as of June 30, according to the Federal Deposit Insurance Corp., and the nation's four largest banks - Wells Fargo, Bank of America, Chase and Citibank - do business here.
That means that unlike in less-competitive markets, consumers here have a better chance of avoiding fees, said Ken Thomas, a banking analyst in Miami.
"We've got new banks aggressively coming in," Thomas said. "If we're ever going to get breaks on fees, it'll be in a very competitive market like South Florida."
Posted: 7:33 p.m. Saturday, March 26, 2011
Big banks are boosting fees, a trend that has savvy consumers seeking ways to avoid ever-rising charges for checking accounts and ATM transactions.
Luckily for bank customers, it's not difficult to avoid fees. Many banks waive fees for customers who have automatic deposits made to their accounts electronically, who maintain minimum balances that can be as low as $100, or who have multiple accounts and loans.
"Just because your bank is instituting a fee doesn't necessarily mean you're going to get stuck paying it," said Greg McBride, a senior financial analyst at Bankrate.com in North Palm Beach.
As banks emerged from the financial crisis of 2008 and 2009, many made up for lost income from lower loan volumes by raising service charges on depositors, banking analysts say. New regulations on overdrafts and debit card fees also are pushing up other fees.
The average overdraft fee hit an all-time high of $30.47 in 2010, and the typical ATM charge reached a record $2.33, according to Bankrate.com . ATM fees are expected to keep rising - banking giant Chase is testing fees of $5 in Illinois and $4 in Texas for customers of other banks who use Chase ATMs. (The fee in Florida is still $3.)
Meanwhile, free checking is slowly disappearing as banks impose more restrictions on no-fee accounts. Only 65 percent of banks offered free checking last year, down from 76 percent in 2009, according to Bankrate. And the average monthly fee for no-interest checking accounts rose to $2.49 last year, a 40 percent increase.
"Many of the banks that jumped on the free-checking bandwagon in recent years are now jumping off," McBride said.
Some banks that marketed consumer-friendly fees have failed. Washington Mutual - which wooed customers in Palm Beach County and the Treasure Coast with free checking and low ATM fees - collapsed in the mortgage meltdown and was taken over by Chase.
Riverside National Bank of Fort Pierce - which touted "Lifetime Free Checking" - also failed. Its new owner, TD Bank, now requires a $100 minimum balance for its basic checking account, and imposes a $15 fee if the depositor's balance falls below $100.
As TD Bank's $100 minimum shows, service charges can be steep, but the hurdles for avoiding bank fees aren't exactly high.
Even so, one big bank already has begun charging some customers for such things as transactions at teller windows. Bank of America's "eBanking" account requires depositors to do virtually all their banking online or through ATMs. Receiving paper statements or talking to a teller triggers an $8.95 monthly fee.
Consumers who are annoyed by such fees are likely to pull their money from big banks and move to community banks and credit unions, analysts say. A Bankrate survey released Monday found 64 percent of Americans would consider switching banks to avoid higher fees.
"The consumer is going to say, 'I'm moving away from the big guys. They're charging too much,' " said Michael Moebs, an economist in Lake Bluff, Ill., who studies bank fees.
Credit unions offer one alternative. They don't aim to turn a profit, don't pay income taxes and are known for low fees. West Palm Beach-based Gold Coast Federal Credit Union, for instance, charges only $5 for overdrafts, President Robert Delaney said.
Community bankers also aim to win business from the big banks by advertising free checking. Palm Beach Community Bank of West Palm Beach offers free checking, and although it imposes overdraft charges, it rarely collects them, President Cal Cearley said.
"We charge so few fees," Cearley said.
One happy reality for Palm Beach County residents seeking to avoid fees: Banks engage in fierce competition for deposits here.
Fifty-eight banks operated branches in Palm Beach County as of June 30, according to the Federal Deposit Insurance Corp., and the nation's four largest banks - Wells Fargo, Bank of America, Chase and Citibank - do business here.
That means that unlike in less-competitive markets, consumers here have a better chance of avoiding fees, said Ken Thomas, a banking analyst in Miami.
"We've got new banks aggressively coming in," Thomas said. "If we're ever going to get breaks on fees, it'll be in a very competitive market like South Florida."
Bank fees on the rise
Average fees collected by banks in 2010:
ATM transaction: $2.33
Change from 2009: +5 percent
Monthly checking account fee: $2.49
Change from 2009: +40 percent
Minimum balance to avoid checking account fees: $249.50
Change from 2009: +34 percent
Monthly fee for not maintaining minimum balance: $13.04
Change from 2009: +4 percent
Source: Bankrate.com
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