Big Banks, Bigger Fees 2001: A National Survey Of Bank Fees
November 1, 2001

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Key To Results Charts | National Results | Letter to Federal Reserve

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Surveying for this report was conducted by PIRG citizen outreach team members, students and other volunteers from participating PIRGs.

Additional research by members and volunteers of state and local organization members of the Consumer Federation of America, including the Arizona Consumers Council, Columbia Consumer Education Council (SC), North Carolina Consumers Council, Virginia Citizens Consumer Council.

And of course, thanks to the U.S. PIRG Administrative Team—Rick Trilsch, Joey Fink, and Liz Guertin. Thanks to Alison Cassady, Liz Hitchcock and Jen Mueller for editing and other advice. Cover by Public Interest GRFX (215-985-1113).

Special thanks to the Colston Warne Grants Program of Consumer Union of the United States for its support of the U.S. PIRG Education Fund Consumer Program and to the Ann Lower State and Local Grants Program of the Consumer Federation of America (CFA) for its ongoing support of state PIRG consumer research.

Bankers still have their hands buried deep in our wallets. Banks are charging us more and hidden fees just to use our ATM card or checking account, according to a November 2001 PIRG Big Banks, Bigger Fees report. Bank service fee income not including ATM surcharges is about $20 billion each year.

Complaints: Complaint about your bank? Contact Bank regulators such as the Federal Reserve Board or other regulators such as the Comptroller of the Currency, which regulates national banks. Don't worry if you send your complaint to the wrong regulator—it will be forwarded.

Bank Fees: A November 2001 PIRG Big Banks, Bigger Fees report finds that the average consumer who can't afford to meet minimum balance requirements pays $228/year for a regular checking account, when all service fees, account fees, and ATM fees are added together.

Banks have devised a three part strategy to gouge consumers. They raise existing fees, invent new ones, and make it harder to avoid fees, by raising minimum balance requirements, so more people pay more fees. And, even though banks have raised the interest we pay them on our credit cards dramatically, they haven't significantly increased the interest they pay us on deposits. PIRG reports document how banks charge consumers twice to use the ATM machine only once.

What Can Consumers Do?

1. Credit Unions: Bank at a credit union, not at a bank. Find credit unions in your town by clicking here. Credit unions are member-owned alternatives to commercial banks. Because credit unions are owned by their members and don't care to gouge them, their fees are generally lower than bank fees. Many larger credit unions have branches, ATM networks and offer all the services of a bank. Many companies, unions, state and local governments and communities have credit unions that you may qualify to join. If one family member qualifies, generally everyone can join. Credit union deposits are federally-insured, just as bank deposits are.

2. Shop For Financial Services. This should be an ongoing process because banks are constantly changing their fee structures. Compare the costs of your accounts to those of other banks in your area. Know what types of transactions you regularly make and evaluate accounts with your needs as a yardstick. You may find a better deal at a different bank. If you don't qualify for a credit union account, small, locally-owned community banks generally have lower prices, and better service, than out-of-state owned mega-banks.

Free checking: 29% of banks in PIRG's 2001 survey offer totally free checking.

Direct Deposit: Ask your employer if you can be paid through direct deposit. The government will also provide Social Security and other benefits through direct deposit. Many banks will offer free or lower-cost checking with direct deposit, because they save so much money.

Linked accounts: Look for banks that offer free checking or free checking with a "linked" or "relationship" balance in another account. Your savings balance—or even a mortgage or car loan—can offset your checking account balance requirement.

ATMs: Large banks are exploiting their ATM networks to gouge non-customers with the ATM surcharge. If enough small bank consumers get tired of paying these outrageous fees and switch to the large bank to avoid them, then the large banks will begin to charge their own customers more fees. While most banks don't charge you if use their own machines, things are starting to change for the worse. So, use your own bank's ATMs whenever possible. If none are around, look for machines with a "NO SURCHARGE HERE" Logo. Avoid double-dipping, fee gouging, surcharging ATMs.

Here are some no-surcharge resources.

First, see our main website http://www.stopatmfees.com. Then, if you are a credit union member, ask your credit union for a list of surcharge free ATMs. Check http://www.cuna.org for the address of your state credit union league.

Here is a sample of some other free ATM networks, for customers of participating banks and credit unions:

New England:
SUM program
Coop Network Members

Western Pennsylvania:
Freedom Network

Wisconsin:
ATM Access

Beware of NOW (interest-bearing checking) accounts. If you cannot maintain high minimum balances, stay away from NOW accounts. The high fees on NOW accounts may cost you more than it's worth to earn the low interest on your balance.

Explore no-frills checking options. If you write few checks each month, look at no-frills flat fee checking accounts. This is particularly important if you cannot meet minimum required balances to avoid regular checking account fees. However, watch out for no-frills accounts with punitive over-the-check-limit and bounced check fees for no-frills accounts. Bank consultants regularly recommend low check limits, high per-check fees, and, special, higher, bounced check fees for these accounts.

3. Complain: Banks shouldn't charge regular customers outrageous bounced check fees or alleged credit card late fees. Demand that the bank waive an occasional $25 bounced check fee, especially if it's due to the bank's complicated check availability schedules. If you can't understand the bank's Byzantine fee brochures, complain! If the bank wants to charge you a fee for innocently depositing someone else's bounced check in your account, complain! And if the bank tries to charge you a fee for talking to a human teller or to call them on the phone, don't simply complain, vote with your feet! And copy your complaint to regulators: Contact Bank regulators such as the Federal Reserve Board or other regulators such as the Comptroller of the Currency, which regulates national banks. Don't worry if you send your complaint to the wrong regulator—it will be forwarded.

And send a letter to the bank president explaining that you closed your account because of outrageous bank fees.

More than 12 million American families can't afford bank accounts. The rest of us are paying too much, especially if we bank at big banks. Meanwhile, in 2000 banks recorded nearly $72 billion in profits, narrowly missing a tenth straight year of new record profits. According to the Federal Deposit Insurance Corporation (FDIC), deposit account and ATM surcharge fee income are important parts of those increased profits.

This 2001 national survey, prepared by the state PIRGs with assistance from state and local member groups of the Consumer Federation of America (CFA), updates our 1993, 1995, 1997 and 1999 national surveys.¹ The disturbing trend of more, and higher, fees is continuing. Data from 2001 are compared on a state-by-state basis and to 1999 national averages.

Since bank deregulation began in the early 1980s, the PIRGs and other consumer groups have conducted numerous studies documenting skyrocketing consumer banking fees. Our studies have helped to focus national attention on the problem of skyrocketing bank fees. Our results are substantiated by the results of the Federal Reserve Board's annual fee reports to Congress. ²

In 2001, our findings show that the cost spread, or "big bank fee gap," between big banks and small banks continues to widen. In 2001, the best deal, for consumers who qualify for membership, is still at member-owned credit unions. Others can find lower fees at small, locally-owned community banks.

On the positive side, this year's study finds more banks, even some big banks in some markets, offering free checking accounts. On the negative side, in addition to the fee increases, we note profoundly disturbing trends in the availability of bank fee information that helps consumers shop around and allows researchers to investigate fee trends. PIRG is sending letters to bank regulators describing the difficulties we are having obtaining bank brochures and understanding bank fee descriptions. If we are having difficulty shopping around, so are consumers.

¹ See the PIRG reports “Big Banks, Bigger Fees 1999,” and "Big Banks, Bigger Fees: The 1997 PIRG National Bank Survey of 419 Banks in 30 States" at http://www.pirg.org/consumer. Also see the print reports "Banks Think Fees, Not Free: The 1995 PIRG Bank Fee Survey of 271 Banks In 26 States," by U.S. PIRG and Janice Shields, August 1995, and "Crushing Consumers: The 1993 PIRG/CFA National Survey of 300 Banks In 23 States", jointly written by U.S. PIRG, the Consumer Federation of America and Janice Shields, Ph.D. Also see PIRG's series of annual reports on rising ATM surcharges, most recently, "Double ATM Fees, Triple Trouble,” March 2001, available at PIRG’s ATM fee website http://www.stopatmfees.com.

² Our results are similar to data from numerous government, consultant and industry data on bank costs and fees for consumer deposit accounts. See discussion below o Federal Reserve studies. The author talks on a regular basis to investigative reporters who conduct their own local surveys, with confirming results.