An October report by the Consumer Federation of America revealed that consumers will likely have a hard time avoiding rising checking account fees unless they have set up direct deposit for regular income checks.
Many interest and non-interest-bearing checking accounts require accountholders to maintain a minimum balance averaging $1,500. If unable to maintain the monthly account minimum, customers will be charged regular monthly fees of up to $300 per year.
“Banks are increasing fees and balances needed to avoid fees,” Jean Ann Fox, a senior adviser for financial services at the CFA, said. “These higher fees and hurdles to avoid fees are especially challenging to the 45 percent of accountholders who maintain low balances and are most likely to overdraw their accounts.”
The research analyzed checking account characteristics and consumer attitudes toward checking accounts across 25 of the largest banks based on the number of branches.
Survey data on consumer checking accounts from the Raddon Financial Group revealed that a majority of customer respondents – approximately 60 percent – had checking balances that fell below $500 in an average month, and more than 35 percent of respondents saw checking balances fall below $100. Fewer than 25 percent of respondents reported minimum balances of more than $1,000.
To avoid rising checking account fees, the CFA said that consumers should compare various checking accounts before deciding where to bank, set up direct deposit to avoid monthly account minimums, avoid interest-bearing checking accounts and overdraft programs, and set aside money to avoid insufficient funds fees.