Bank fees rise for checking, ATMs; fewer credit unions offer free accounts

Checking and ATM fees are rising at the nation's banks, and fewer credit unions are offering free accounts, two new studies show. MoneyRates.com's semi-annual bank fees survey found that, by nearly every measure, the fee environment for consumers has worsened since the end of 2011.

The average minimum checking-account balance needed to avoid a monthly service fee jumped by $856, to $4,447. Overdraft fees jumped to an average of $29.83, up from $29.23, said the data provider about bank rates, personal finance and savings accounts. Among banks that charge a monthly fee, the average cost was $12.08, up from $11.28. ATM fees also rose.

"This is the most comprehensive rising fee trend we've seen in one of our checking account surveys," Richard Barrington, MoneyRates.com senior financial analyst, said in a statement. Typically, credit unions have been a haven for fee-sensitive consumers, but the ranks of those offering free checking is shrinking, according to a Bankrate.com study, also released Monday.

Seventy-two percent of the nation's 50 biggest credit unions offer free checking accounts with no minimum balance required, down from 76 percent last year, Bankrate.com said. Read more>>

Banks Robbed Customers of Nearly $30 Billion in Overdraft Fees Last Year

Americans incurred $29.5 billion dollars in overdraft fees at the nation’s 12 largest banks and credit unions in 2011. That’s nearly $100 for every U.S. citizen, charged for overdrafting a checking account.

Overdraft fees, for those lucky enough to have never encountered them, occur when a bank withdrawal leaves a customer’s account below a pre-determined level. For some accounts, customers can draw the funds all the way down to zero and only incur a fee when the balance goes negative. Other accounts come with minimum balance requirements, forcing customers to keep at least, say, $500 or $1000 in the checking account at all times.

99% of the 237 unique checking accounts studied charged an overdraft fee of some kind, with the median penalty fee costing a customer $35. You might not know that, though. As the Pew study points out, the median length of a checking account disclosure statement – the fine print that most customers gloss over en route to opening their account – is a whopping 69 pages. That length is down from the 111-page average in 2010, but it’s still not exactly light reading. Take this Bank of America disclosure, for example; at 37,000+ words, it’s about 8,000 words longer than Steinbeck’s Of Mice And Men. Read more >>

40,000 join credit unions in bank dumping protest

Image via WikipediaMore than 40,000 people joined credit unions during the "Move Your Money" and "Bank Transfer Day" movements this past Saturday, continuing the exodus of customers fed up with big banks.

The new customers were the latest in a surge of members credit unions have signed up in recent weeks, as public anger over proposed fees at Bank of America and elsewhere has boiled over, the Credit Union National Association said Tuesday.

"Since Sept. 29 -- the day Bank of America announced its now-rescinded monthly $5 debit card fee -- average estimated membership increases nationally were around 20,000 new members each day, " CUNA President and CEO Bill Cheney said in a statement. "On Saturday, consumers doubled the pace. It's clear that consumers kept up their interest in credit unions."

In a previous survey, released late last week, the industry group said an estimated 650,000 consumers had joined credit unions between September 29 and the first week of November, bringing with them an estimated $4.5 billion in new savings accounts. More...

Bank Fees Push Consumers to Put Money Elsewhere

Occupy Santa Cruz - Bank of America refusing to close account

Alternative finance firms, from credit unions to online and pawn lenders, are gaining traction as banks turn off the tap for easy cash and start charging fees for services that customers have had for free.

Some 60 million Americans — close to a fifth of the adult population — were underbanked or unbanked in 2009, according to the Federal Deposit Insurance Corp. That number is likely to rise as banks choke off free checking, and adjust to new rules that cut into their revenue.

Bank of America, Citigroup, J.P. Morgan Chase, Wells Fargo, PNC Financial, Suntrust and others are beginning to charge for once-free services, making a bank account more of a luxury to those living on a tight budget.

"Credit unions are an alternative source for the kind of services a bank provides," said professor Lawrence White of New York's Stern School of Business. "I'm hoping they would see the unbanked as part of their mission. That would be the most socially worthwhile thing they could do." More...

New Bank Fees Push Thousands Into Credit Unions

Image via WikipediaLast Friday, after Bank of America's (BAC) announcement of new fees on debit cards, retired postal worker Victoria Lee took her adult daughters to her local USPS Credit Union. "[My daughters opened] free checking accounts with no charges for the use of debit cards," Lee said. Like many Americans who are carefully watching every dollar, the Florida resident said she was grateful to have an alternative to retail Wall Street banks.

Meanwhile, a record-breaking 3,200 new checking accounts were opened over the weekend at the Navy Federal Credit Union, the world's largest credit union with 3.7 million members and nearly $48 billion in assets. The weekend surge -- which crushed the previous high of 2,500 -- fits into a larger trend for the credit union, which serves the Department of Defense and active duty military. It has had annual growth between 6.3% and 6.7% since 2007, and is on track to record a 14% uptick in membership this year, said Tisa Head, the senior vice president of savings products. In addition to its fee-free debit cards and accounts, another driver for the year's projected double-digit membership increase has been the credit union's willingness to post pay early for active duty members who use the Active Duty Checking account. More...