Checking accounts just keep on getting more expensive.
Fees on everything from ATMs withdrawals to monthly maintenance and overdrafts have risen in the last six months, according to a mid-year bank fee survey from MoneyRates.com, a website that tracks banks' services and rates.
The cost of just maintaining a checking account jumped to $12.08 on average, from $11.28, according to the survey. The minimum balance required to avoid paying a this maintenance fee jumped to $4,447, from $3,591, in the last year, the survey showed. That is akin to an $850 fee increase.
The cost of simply opening an account has also gotten more expensive: The average deposit needed to open account rose to $409 from $392 in the last year, the survey showed. The average cost of overdraft fees and ATM withdrawls also increased in the last six months.
“This is the most comprehensive rising fee trend we’ve seen in one of our checking account surveys," said Richard Barrington, MoneyRate's senior financial anayst, in a release. "This doesn’t just matter when you are shopping for a checking account. You need to watch for new fees popping up in your existing accounts.”
The survey analyzed data from more than 100 banks, including the 50 largest U.S. banks by deposit amount as well as mid-sized banks.
Over the last few years, changing financial regulations have cut into the revenue of big banks and reduced revenue income from overdraft fees, as well as revenue made from debit cards' interchange swipe fees, which were capped last fall under the Durbin Amendment. This has put pressure on banks to find new sources of revenue, which many are doing by raising fees and adding more products like prepaid cards.
Meanwhile, community banks and credit unions -- and increasingly non-bank prepaid card programs -- are trying to capture more business from consumers who are fed up with rising bank fees, positioning themselves as a lower-cost alternative. This week, some community banks and credit unions are giving away free gas in 20 cities around the country to raise awareness about banking alternatives.
1. Comparison shop
Make a list of the fees and rates at your current bank, then look at what others have. Start with our rates page, where you can compare <a href="http://www.moneytalksnews.com/rates/" target="_hplink">interest rates</a> on checking accounts, money market funds, savings accounts, mortgages, and other loans. But don't forget to factor in other conveniences, like hours and the proximity of branches. Don't overlook <a href="http://www.moneytalksnews.com/2010/09/30/7-reasons-you-should-join-a-credit-union-this-week/" target="_hplink">credit unions</a>, either. They often offer higher savings rates and lower loan rates than the megabanks. Search for them at the <a href="http://www.creditunion.coop/" target="_hplink">Credit Union Association</a> site.
2. Negotiate with your current bank
If you have a mostly happy history with your current bank, take the best offer from your comparison shopping and throw it back at them to see if they'll cut you a break on fees or hike your savings rates. As a longtime customer, you have a little leverage.
3. Get a "switch kit"
If you do decide to leave, ask your new bank or credit union for a "switch kit." These often come with step-by-step instructions, contact info, and forms to transfer services like direct deposits and automatic payments. But even so, <a href="http://defendyourdollars.org/press_release/cu-report-switching-banks-hard-for-consumers" target="_hplink">Consumers Union says</a>, "Re-routing automatic payments and deposits into a new account can take four to six weeks."
4. Don't close the old account yet
You may be in a rush to conclude business with your old bank, but it's important to make sure your transition is seamless - missing payments, misplaced deposits, or delays can end up costing you. Leave a cash cushion to cover payments you may have forgotten. Wait three months to close the account completely, or at least until you're absolutely sure all's well. If there are fees associated with transferring your balance - Consumers Union says to expect "$7 to $10 for certified checks and from $24 to $30 for a wire transfer" - you might skirt them by moving money gradually, withdrawing up to allowed limits and depositing the cash to the new account. Using cash more frequently than plastic can also help.
5. Watch the new account
Keep a keen eye on your new account, checking it daily for the first few weeks. Be sure all your regular deposits are coming in and all your bills are being paid from the proper account. You also want to get familiar with your new bank's quirks, like how long deposits take to clear and how it lists your balances and transactions, to avoid trouble.
Make sure you go over all the paperwork relevant to your new account, so you don't get tripped up by processes that differ from your old bank, hidden fees, or upcoming changes. And keep a list of these, since you may want to re-evaluate your new bank sooner rather than later - especially if the government actually does make it easier to switch. Beware of switching again too soon: Consumer Reports says several banks charge $25 fees for closing within the first six months.