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IWSJI Year later banks free checking costs more
NEW YORK (9/25/12)--So-called free checking accounts are more expensive than ever, The Wall Street Journal reported Monday, citing a new survey from Bankrate, which analyzed 477 checking accounts at 247 banks and thrifts.

To avoid a fee, bank customers must keep an average minimum balance of $723 in checking accounts that pay no interest--up 23% since last year, reported the Journal. The average monthly fee on noninterest accounts rose 25% to a record $5.48, said the study.  Also rising are fees for ATMs, overdrafts and minimum requirements tied to account balances or regular deposits. The study also found that 39% of noninterest checking accounts are free to all customers, down from 45% in 2011 and from a peak of 76% in 2009.

The Journal, which mentions public outcry over new debit card fees last year that led to Bank Transfer Day, attributes banks' fee increases to the economy and to new regulations that have many accounts unprofitable because maintaining checking accounts costs $250 to $300 a year.

Banks are cutting costs and trying to step up profits, the article said. Still, U.S. banks earned $34.5 billion in second quarter, a 21% increase over year-ago levels, according to the Federal Deposit Insurance Corp.

The rising fees are no surprise to those who watch banks' products and services. After Bank Transfer Day on Nov. 5, when thousands of consumers switched their accounts to credit unions and community banks, a number of financial experts warned that banks would find ways, even some hidden ways, to raise fees in other areas. Today the anti-bank sentiment is still strong and fees continue to feed that discontent. (See related News Now article, "Occupy anniversary: Anti-bank sentiment still strong."  Use the link.)

Credit unions, which have lower or no fees, and better rates are not included in the study. A recent article in the Louisville, Ky., Courier-Journal (Sept. 15), noted in an article, "Credit unions vs. banks: Should you make the switch?" that better interest rates, free checking accounts  are areas where credit unions have an advantage over banks.

Bankrate.com financial analyst Greg McBride told the Courier-Journal that credit unions have "a much higher prevalence of free checking accounts in an era of declining availability of free checking."
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