money Checking account fees hit record highs this year, study finds
Americans are paying record-high fees for checking accounts, while receiving historically low returns, according to a new survey released Wednesday.
It’s also gotten harder to avoid some of those fees.
The average monthly fee for interest-bearing checking accounts is $15.50 — up 3% from last year — and the highest on record, according to Bankrate’s annual study. To bypass that fee, consumers must maintain an average balance of $7,550 — up 6% from last year and another record.
Read more: Americans reach into their own pockets to financially help family and friends
At the same time, the average yield on checking accounts tied the low of .04%, the study found.
“It's getting costlier to have the wrong checking account,” Greg McBride, Bankrate’s chief financial analyst, said. “It's getting costlier for overdrafts, and in some cases, out-of-network ATM withdrawals.”
Case in point: The average overdraft fee also reached a historic high of $33.47, up 11 cents from last year. Although the increase is modest, the upward trend in the fee is unmistakably intact, with increases outnumbering decreases.
Read more: Early retiree Michael Quan shares the financial lessons he's teaching his kids
But not all costs are rising and the average ATM surcharge — the fee that ATM owners charge non-customers — decreased to $3.08, breaking a 15-year streak of increases. The drop is indicative of the growing number of free out-of-network ATM withdrawal policies, with 35% of accounts now offering this.
“While large banks have large ATM networks, many smaller banks and credit unions belong to nationwide fee-free alliances that may have significantly more ATMs available than even the ATM networks of big banks,” McBride said.
How to avoid checking account fees
Avoiding costly overdraft fees means keeping tabs on your checking account’s incoming credits and outgoing debits, but McBride acknowledged that “slip-ups occur” and “a line of defense should be established” by linking your checking and savings accounts, so money can be immediately transferred to cover a deficit.
Read more: Here's how the pandemic has changed our feelings about shopping
You also don’t necessarily need to change banks if you’re being charged high fees, McBride said. You might discover there are other accounts at your existing bank that are better suited for you.
“Go back and look and see if there are new fees or balance requirements that are now in place that are inconsistent with your banking lifestyle,” he said.
Customers can even take their money online as online-only banks are more liberal with rates and less punishing with fees. Also, consider credit unions that “have an even higher propensity for free checking” compared with traditional banks, McBride said.
Above all else, be upfront with your financial institution about your financial circumstances, McBride said.
“If you've been laid off or had your income sharply reduced,” he said, “they may be able to waive or forego fees for a period of time, while you're experiencing difficulty.”
Stephanie is a reporter for Yahoo Money and Cashay, a new personal finance website. Follow her on Twitter @SJAsymkos.
Best North American airports: Air travel hits record-high in satisfaction during pandemic
1 in 5 Americans couldn't make it to the election on their cash reserves alone
Coronavirus puppy scams 'seemed legit,' ensnared dog lovers amid pandemic: Illegal Tender podcast
Airlines offer flights to nowhere, grounded in-plane dining to bring in revenue
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.
