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Free Checking Declines While ATM Fees Rise

Free Checking Declines While ATM Fees Rise

Many consumers feel a bigger bite from their bank

September 26th, 2012 by Mark Huffman of ConsumerAffairs in News's latest checking account survey may tell you all you need to know about the state of relations between consumers and their banks. The survey -- the 15th annual -- shows the percentage of free checking accounts offered by U.S. banks continues to fall as other checking fees continue to rise.

Specifically, the cost of using an ATM at the typical bank climbed in the last year. The survey found the average ATM surcharge -- the fee charged by an ATM operator to a non-customer -- rose four percent to a record $2.50.

The average ATM fee increased for an eighth straight year and, for the first time, 100 percent of banks that surveyed charge non-customers to use their ATMs.

Many banks also charge their own customers for using another company's ATM. This fee jumped 11 percent to $1.57. For a typical bank customer paying both fees, the average total of $4.07 is a record and is up nearly seven percent from last year.

Free checking is fast disappearing

In addition to raising ATM fees, more banks are saving money by doing away with free checking policies. Only 39 percent of non-interest checking accounts surveyed are available to all customers free of charge, down from 45 percent last year and the peak of 76 percent in 2009.

Some banks raised their fees on checking accounts, a move the survey shows tends to lose customers.

Seventy-two percent of consumer say they would consider switching checking account providers if their financial institution raised its fees on checking accounts, compared with 64 percent in March 2011. Households earning $75,000 or more are the most likely to say they would switch, at 82 percent.

Banks saw this demonstrated last November when one disgruntled consumer organized National Bank Transfer Day, a grassroots movement in which hundreds of thousands of consumers switched their accounts to small banks and credit unions, which charge lower fees.

"Checking accounts that are free on a standalone basis continue to diminish," said Greg McBride,'s senior financial analyst. "But a free checking account is still within reach of the majority of Americans, whether by getting the fee waived through direct deposit or moving to a bank or credit union that still offers free checking."

McBride says consumers who practice good financial habits should rarely -- if ever -- incur ATM and overdraft fees.