Report: Consumer Protection

Big Banks, Bigger Fees 1999

A National Survey Of Bank Fees
Released by: U.S. PIRG

Over 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 1998 banks recorded nearly $62 billion in profits, an eighth straight record year. According to the Federal Deposit Insurance Corporation (FDIC), deposit account and ATM surcharge fee income are important parts of those increased profits.

This 1999 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 and 1997 national surveys.1 The disturbing trend of more, and higher, fees is continuing. Data from 1999 are compared on a state by state basis and to 1997 national averages.2

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 findings show a continuing cost spread (or, "big bank fee gap") between big banks and small banks, although small banks are beginning to narrow the gap somewhat. Our results are substantiated by the results of the Federal Reserve Board's annual fee reports to Congress, which find that multi-state banks impose higher fees than locally owned banks. The best deal, for consumers who qualify for membership, is at member-owned credit unions. Others can find lower fees at small, locally-owned community banks.

The survey results are profoundly disturbing. Bankers are punishing low- and middle-income consumers with unjustifiable fee increases while bank profits soar to new records each year.

Meanwhile, a bank-friendly Congress continues a massive rollback of critical laws that protect consumers, communities and taxpayers. 1994 legislation promoting interstate branching has contributed to the merger frenzy that is leading to more higher-cost, multi-state banks. In 1996, the Congress weakened the Truth in Savings Act and other consumer laws, making it harder for consumers to compare fees. This year, both the House and Senate have already overwhelmingly approved so-called Financial Modernization legislation that would expand bank powers to sell insurance and investment products, without concomitant consumer safeguards. The legislation, now in a conference committee, would encourage the growth of bigger, higher fee banks, leading to less consumer choice and higher fees for all Americans. It needs numerous amendments, including the following:

  • a requirement that banks offer low-cost lifeline accounts to offset rising bank fees, 
  • protection from privacy invasions caused by information sharing by mega-banks, 
  • stronger protections when uninsured investment and insurance products are offered to consumers, and 
  • protection of the right of states to enact stronger consumer laws.



1. See the reports "Big Banks, Bigger Fees: The 1997 PIRG National Bank Survey of 419 Banks in 30 States," "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 reports on rising ATM surcharges, most recently, "ATMs: Always Taking Money," April 1999.

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 (Footnote 7) of Federal Reserve studies. The author talks on a regular basis to investigative reporters who conduct their own local surveys, also confirming our results.

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