Overdraft fees hit record high, interest control account balance requirements soar

NEW YORK – October 20, 2021 – At a time when more than half of Americans are living paycheck to paycheck, overdraft fees (NSF) hit a new high of $ 33.58, up slightly from $ 33.47l last year, according to Bankrate.com’s Annual Checking Accounts and ATM Fee Survey. . Additionally, for interest-bearing chequing accounts, the average balance to avoid monthly fees climbed 31% from last year’s high of $ 7,550.42 to a new high of $ 9,896.81, while that average yields have fallen to a new high (0.03%). The study examined interest-free accounts and interest accounts and their associated fees for over 20 years. Click here for more information:

https://www.bankrate.com/banking/checking/checking-account-survey/

The average cost of overdraft of a current account, or average insufficient funds charge (NSF), increased for the third year in a row to a new record high of $ 33.58, up 0.3% from to the previous record of last year. The most common fees, for the 13th consecutive year, remain at $ 35, and the fee range is the same as in 2019 and 2020. However, these fees tend to increase, with the increase in overdraft fees exceeding the costs decreasing from 7 to -1 margin.

Overdraft fees also vary by metropolitan area, with Philadelphia having the highest average overdraft fee ($ 35.70), while Cincinnati’s fees are the lowest ($ 30.42).

Bankrate Chief Financial Analyst Greg McBride, CFA suggests, “Before initiating transactions, use your bank’s app to check your available account balance to avoid overdrafts. The check you deposited yesterday may count towards your total balance but not yet be available for immediate withdrawal and could trigger an overdraft. Establish a link between your checking account and your savings account to automatically cover any shortfall and avoid overdrafts. Plus, sign up to receive email or text alerts that notify you when your balance drops below a designated threshold. Be proactive to avoid overdrafts, as accidental slips happen.

For interest-bearing checking accounts, the average monthly service charge is a record high of $ 16.35, down 5.5% from a record high of $ 15.50 last year. The average balance required to avoid monthly fees climbed 31% from a record high of $ 7,550.42 last year to a new high of $ 9,896.81.

79% of interest checking accounts require some form of balance requirement, either in the checking account or across multiple accounts, to avoid charges. Only 12% of interest-bearing checking accounts will waive direct deposit-only fees, down sharply from 21% last year. In addition, less than 8% of checking interest accounts are free without a stipulation, and when it comes to this interest, the average yield has fallen to a new high of 0.03%, from 0.04% last year.

In contrast, interest-free checking accounts have the highest percentage of free accounts, meaning they have no monthly fees or balance requirements, since 2010 at 48%, marking the 6th consecutive year that the percentage of free accounts has increased.

For interest-free accounts, the average monthly fee is $ 5.08, down 3.6% from $ 5.27 last year and the lowest since 2011. The average balance required to avoid the fee is at its lowest level in 10 years of $ 506.62, down 15% from $ 593.52 last year. year.

In addition to the high percentage of free accounts, 50% of accounts will waive monthly fees with direct deposit, account balance, transaction activity or a combination of these. 99% of interest-free accounts are free or can become free, with 41% of accounts waiving monthly fees only on a direct deposit basis, making it the predominant fee waiver. 89% of interest-free accounts are either free or can become free through regular direct deposit into the account.

“If you pay a monthly fee for your checking account or maintain an excess balance to avoid charges, look for one of the many accounts that are free or can become free with nothing more than direct deposit,” he said. noted McBride. “48% of interest-free accounts are free, but only 8% of interest-bearing accounts are free. Avoid high fees, high balance requirements, and low yields on interest-bearing checks in favor of free accounts with no fees or balance requirements.

The average ATM surcharge, the fee levied by an ATM owner on a non-customer making a withdrawal, was unchanged from last year at $ 3.08. This is a rare feat, as this surcharge has increased in 20 of the past 23 years, 2004, 2020 and 2021 being the exceptions. However, each bank that owns ATMs surveyed will charge non-customers.

Average fees charged by banks when their own customer leaves the network fell for the 4th year in a row, to $ 1.51, a 10-year low and down 12% from the previous record in 2017 of 1, $ 72. This decrease can be linked to the continued increase in the number of accounts allowing free off-grid withdrawals, now 40%, compared to 35% last year and 32% in 2019.

Combining the two fees, the average total cost of an off-grid ATM withdrawal is $ 4.59, down for the second year in a row, and about 3% below the record of $ 4.72 set in 2019. .

ATM fees vary by metro area, with Atlanta having the highest off-grid ATM fees of the top 25 metro areas in the study ($ 5.23), while Los Angeles has the lowest ($ 3.00). $ 90).

* Reflects combined ATM fees (those charged by the off-grid ATM operator and those charged by the consumer’s financial institution)

“Despite the growing prevalence of free off-grid withdrawals, these aren’t the only fees to worry about,” McBride added. “All ATM owners surveyed still charge non-customers. Therefore, avoiding ATM fees always means avoiding withdrawals outside of your network. While some merchants charge a fee when they get a refund on a debit card purchase, this remains the exception rather than the rule and remains a viable way to avoid higher ATM fees.

The investigation group consisted of 245 banks and savings banks in 25 major US markets. A total of 236 interest-free and 236 interest-free checking accounts along with their associated ATM and debit card fee policies were included in the survey, which was conducted from July 19 to August 9, 2021.

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