U.S. PIRG News Release For Immediate Release:
October 14, 1999 | |
National Survey Shows Rising Bank Fees
Hidden Fees Help Banks Increase Revenue, Proposed Bank Legislation Will Rip Off Consumers
Download the full report.
The average annual cost of maintaining a regular checking account has risen to more than $217 in 1999, according to a national report released today by the U.S Public Interest Research Group (PIRG). Bank profits have broken new records for the last eight calendar years, reaching nearly $62 billion in 1998, with fee income a growing piece of the profit pie, yet banks continue to increase customer account fees and charge hidden new fees, according to the U.S. PIRG report.
"Banks are punishing consumers with a relentless onslaught of more and higher fees, " said Ed Mierzwinski, Consumer Advocate for U.S. PIRG. "Worse, many banks are hiding fee increases, by adding new fees for services that used to come standard with your checking account. Many banks are now charging us monthly ATM card rental fees, cancelled check return fees, telephone call center fees and even fees to close our accounts."
“More and higher bank fees have left at least 12 million American families unable to afford bank accounts,” added Mierzwinski. “Congress will make the problem worse if it approves the Financial Modernization bill, which will make big banks bigger, raising fees for everyone without requiring low-cost accounts. In addition, the bill will allow banks to invade consumer privacy without recourse,” Mierzwinski added. “We urge consumers to call Congress and demand changes to fix this one-sided bill.”
KEY FINDINGS:
LOW COST AND HIGH COST STATES
Among 526 banks surveyed in 34 states, nationally, the most expensive states to bank in were the following: New York (worst), Florida, Texas, Michigan, and North Carolina. The least expensive were Nebraska (best), Missouri, Utah, Colorado and Arkansas.
U.S. PIRG ranked states on 12 different cost factors, including checking account monthly fees, ATM fees, bounced check fees, and minimum balance requirements and the number of banks offering free checking.
“The bank strategy to increase fees, invent new fees, and make it harder for consumers to avoid fees is working,” Mierzwinski said. “Big banks are getting bigger, taking away consumer choice and raising prices for all, and while small banks are still a better deal, the survey shows small banks are raising fees as well.”
Among the other findings of the report:
REGULAR CHECKING ACCOUNTS
Nationally, in 1999, all consumers who couldn’t meet account balance minimums paid an average of $217.32 to maintain a regular checking account, up from $199.79 in 1997. When banks are broken down into big banks and smaller banks, big bank consumers paid $234.87, or an average of 16% more, ($32.08), than small bank consumers, who paid $202.79. The big bank fee gap increased by $4.14, or 15%, from 1997, when big bank consumers paid an average of 15% more ($27.94).
By comparison, the survey found the average annual regular checking account cost at credit unions to be only $111.59 in 1999, or less than half of the big bank cost. In nearly every state, consumers can find lower costs at smaller banks or credit unions.
BOUNCED CHECK FEES:
Nationally, big banks raised their fees for bouncing a check to an average of $23.08 in
1999, up 10% from 1997. At small banks, bounced check fees rose 4%, to $21.19. Overall,
consumers paid an average of $22.01 for bouncing a check.
DEPOSIT ITEM RETURNED (DIR) FEES
Nationally, big banks charged their customers $5.12 in 1999 for receiving someone
else's bounced check, called a deposit item returned (DIR) fee, up 5%. Small bank DIR fees
declined slightly to $4.51 in 1999, down from $4.92 in 1997. Overall, consumers paid an average $4.79 DIR fee.
FREE CHECKING ACCOUNTS
Nationally, 92 banks (17.5%) of the 526 in the survey offer completely free checking accounts, with no fees and no restrictions, other than no return of canceled checks. By comparison, the survey found that 45% of credit unions offer free checking with no restrictions.
ATM FEES
Nationally, fees charged by big banks for their own customers to use other banks' ATM machines (called “off-us” fees) increased to $1.27 in 1999 from $1.19 in 1997. At small banks, off-us fees rose to $1.03 in 1999, from $0.91 in 1997. Off-us fees averaged $1.14 overall. Nationally, ATM surcharges imposed on other banks' customers were $1.35 at big banks in 1999. Small banks imposed surcharges of $1.08 in 1999.
“Consumers should shop around for bank fee deals. Your best bet is usually at a credit union or small bank," added Mierzwinski. "Wherever you bank, look for free checking, or free or low-cost checking with direct deposit or by linking your checking account to another account. Be wary of NOW accounts, unless you keep a high balance.”
“Get PIRG’s “Fight Fees Alert” at our web site, “pirg.org”, added Mierzwinski. “Besides teaching you to shop, it will help you fight back against unfair fee increases. Call Congress today to urge Congress to change HR 10, the Financial Modernization bill, to require low cost lifeline checking accounts and privacy protections for consumers,” Mierzwinski concluded.
The report was based on data on 526 banks compiled from bank brochures collected between March and June by PIRG offices and local consumer groups affiliated with the Consumer Federation of America in 33 states and the District of Columbia. Results were compared to an April 1997 PIRG survey of 419 banks in 29 states and the District of Columbia. Big banks were derived from banks listed among the 300 largest by deposits in year-end 1998 statistics of the Federal Deposit Insurance Corporation (FDIC). U.S. PIRG is the national lobbying office for state
PIRGs, which are non-profit, non-partisan consumer and environmental advocacy groups active around the country.
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