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Free Checking Falls to 45% of Customer Accounts, Bankrate Says

Free Checking Falls to 45% of Customer Accounts
Free checking has dropped to about 45 percent of U.S. customer accounts, compared with 65 percent last year, a study found. Photogapher: Getty Images

Free checking has dropped to about 45 percent of U.S. customer accounts, compared with 65 percent last year, a study found.

The average monthly fee on non-interest checking accounts is $4.37, compared with $2.49 last year, according to the survey released today. The average balance required to avoid the charge has more than doubled to $585.

“Just because banks are eliminating free checking doesn’t mean you’re going to be stuck paying the fee,” said Greg McBride, senior financial analyst at, a unit of Bankrate Inc.

Legislation capping debit-card swipe fees charged to merchants and restrictions on overdraft charges are driving banks to stop offering free checking as a way to raise revenue, McBride said. Changes to debit-card swipe fees may cut annual revenue at the biggest banks by $8 billion, data compiled by Bloomberg Government show.

Debit-card fees are still rare, McBride said. Less than 2 percent of accounts surveyed charge a monthly or annual fee for using a debit card and 4 percent apply a point-of-sale fee when swiping it.

“We’re going to see more fees for having debit cards or more fees for using a debit card but such fees will likely still be the exception rather than the rule,” McBride said.

Bankrate, based in North Palm Beach, Florida, surveyed 243 interest-bearing checking accounts and 238 non-interest accounts nationwide.

In addition to the 45 percent of accounts that are still free, another 47 percent will waive the fee for customers if they use direct deposit of paychecks or maintain certain minimum total balances, McBride said.

ATM Surcharges

The average automated teller machine surcharge assessed by a bank on non-accountholders hit a record $2.40 this year, compared with $2.33 last year, the study said. The average fee charged by a customer’s own financial institution for going outside the network is unchanged at $1.41.

Denver has the highest ATM fees, averaging $2.75, while Cleveland has the lowest at $2.06, the survey said.

Fees on interest-bearing checking accounts, and balance requirements to avoid them, also have increased, McBride said. The average monthly fee is $14.15 and the balance required to avoid the fee jumped about 44 percent to $5,587 this year, the study said.

“The typical interest-bearing checking account is not an efficient use of consumers’ cash,” McBride said. “You have to tie up a big balance at a very low yield to avoid a fee.”

The average interest-bearing checking account is yielding 0.08 percent, according to Bankrate.

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