Bankrate Releases Spring 2006 Checking Study

• The average bounced check fee is $27.04 and with more banks using a tiered structure, the cost can quickly accelerate higher. Many large banks are charging a fee of $25 for a bounced check. With the fee increasing to $30 for each subsequent bounced check, a consumer could lose $115 in fees for 4 bounced checks within a 12 month period.
• ATM surcharges hit a new high and are more prevalent than ever. The fee banks charge to non-accountholders now averages $1.60, with 98 percent of banks owning ATMs charging a fee.
• The average balance requirement on interest checking accounts hit a new high of $2,465. With interest checking yields remaining low, customers are not getting much in return.

"With bank fees rising and interest checking accounts remaining at low yields, consumers need to be more conscientious than ever in finding the best options for their money," said Greg McBride, Senior Financial Analyst at Bankrate.com. "The information provided in our checking study, along with Bankrate.com's rate tables and advice, helps consumers make the best choices for their banking needs," McBride added.

What can consumers do to avoid additional banking fees? The study also offers consumer advice on finding the best checking account options. For example:

• Sign up for overdraft protection, by linking a savings account to your checking account.
• Look at non-interest checking accounts. Non-interest accounts require lower balances and a lesser penalty for slipping below that balance.
• Avoid ATM fees by getting cash back at the point-of-sale when using a debit card.

Bankrate's semiannual study surveys 462 accounts from the leading banks and thrifts in each of the 25 largest markets to find the latest trends on checking accounts and ATM fees. The study also compares checking accounts offered by online banks.

The key findings of the study are:

• Average Yield: Interest rates have been on a consistent upward trajectory since June 2004, but improvement in the yields for interest checking accounts has been hard to detect. The average yield on an interest checking account inched higher, from 0.31 percent to 0.32 percent, since the Fall 2005 survey. Yields have not increased much since the record low of 0.26 percent was established two years ago.
• Minimum to Open and Earn Interest: The average amount required to open an interest checking account and earn interest drifted lower to $429.76. This is the lowest in three years, and is at the lower end of the well-established range of $418 to $494 that has prevailed throughout the past five years.
• Minimum to Open a Non-Interest Account: The average minimum deposit required to open a non-interest account is just $72.43, virtually unchanged from $72.56 six months ago and $72.72 one year ago.
• Minimum Balance Required to Avoid Fees - Interest Account: The average balance required to avoid fees on an interest account hit a new record high of $2,465. This represents a 7.4 percent increase over the average $2,294 posted six months ago and the nearly identical $2,295 posted one year ago.
• Minimum Balance Required to Avoid Fees - Non-interest Account: The average balance required to avoid fees on a non-interest account was little changed from six months ago, falling from $267.79 to $266.58, and is down from $301.47 one year ago.
• Monthly Service Fee - Interest Account: The average monthly service fee on an interest checking account hasn't varied much in the past five years, and this version of the study was no exception. The average fee is $10.85, up only pennies from $10.81 in the Fall 2005 edition, and down from $11.08 one year ago.
• Monthly Service Fee - Non-Interest Account: The average monthly service fee for non-interest accounts hit a new low. Yes, you read that right -- a fee hit a new low. The average fee fell from $3.00 to $2.80, extending a gradual trend in recent years attributable to the growth of free checking.
• Bounced Check Fee: The average bounced check fee rebounded, rising from $26.90 to $27.04 since the Fall 2005 survey. The average fee is still the second-highest on record, behind only the average of $27.13 one year ago.
• Online Access: The availability of online access continues to creep higher. Currently, online access is available on 98 percent of accounts, versus 97 percent one year ago and 96 percent two years ago.
• ATM Surcharge: The average fee assessed by banks to non-accountholders using their ATMs bounded higher once gain, establishing another record high in the process. The average ATM surcharge is now $1.60, up from $1.54 in the Fall 2005 survey. The average surcharge has increased 14 percent in the past year and 21 percent in the past two years, from $1.40 and $1.32, respectively.
• Percent of Bank-Owned ATMs with Surcharges: The percentage of banks with ATMs that assess surcharges also hit a new record high. Of the banks in the survey that own ATMs, 98 percent hit non-accountholders with a fee, up from 96 percent in Fall 2005 and 89 percent two years ago.
• Fee to Use Another Bank's ATM: If there is one bright spot in the world of ATM fees, it is this: the average fee your bank charges to use another bank's ATM dropped from $1.37 to $1.29. This is the first decline seen in two years as the percentage of accounts charging such fees fell to a new low of 81 percent.
• Annualized Cost of ATM Transaction Fees: The good news of fewer banks charging for withdrawals at other banks outweighed those banks' decisions to increase the hit to non-accountholders. As a result, the total estimated annual cost to consumers of withdrawals from ATMs belonging to other banks retreated. Using General Accounting Office data on the number of ATMs and transaction volume, Bankrate.com estimates consumers will pay a total of $4.2 billion for such withdrawals in 2006.

INTERNET BANKS

• Minimum to Open: The trend of higher opening requirements in order to earn interest and very modest initial sums for non-interest accounts holds, whether online or offline. The average amount required to open an account and earn interest is $429 at traditional banks and $605 at internet banks. On non- interest checking accounts, the minimum deposit required is $72 and $83, respectively.
• Average Yield: Internet banks have long offered much higher yields on interest checking accounts than their traditional brick-and-mortar banking counterparts. The rising interest rate environment is also more evident in the yields at internet banks, where the average yield is 1.96 percent versus the paltry 0.32 percent at traditional banks.
• Minimum to Avoid Fees: Internet banks offer much higher yields, and while avoiding fees means keeping a high balance, it is only half as bad as brick- and-mortar banks. The average balance requirement on interest checking accounts at internet banks is $1,250, approximately half of the $2,465 required at traditional banks.
• Monthly Service Fee: The average monthly service fee on interest checking accounts at internet banks is again, about half of that at traditional banks. The average fee at internet banks is $5.50, compared to $10.85 at traditional banks.
• Bounced Check Fee: Online or offline, bouncing a check will cost you. There is not a significant difference in the average bounced check fee at internet banks versus traditional banks, with the average fees weighing in at $26.33 and $26.91, respectively.

For complete study results, go to http://www.bankrate.com/checkingstudy