Bank Fees Ascend to Record Highs
By Consumers Union on Thursday, October 2nd, 2014
Another year, another disappointing result from Bankrate’s annual bank survey: several fees are continuing to creep up to record highs.
According to the AP, Bankrate found that both out-of-network ATM fees and overdraft fees are up yet again this year. The average overdraft fee is up 1.7% from last year, to $32.74. In comparison, last year the average overdraft fee was $32.20. Out-of-network ATM fees now reach an average of $4.35, up 5% from last year, and up 23% from 2009.
Also disconcerting is that only 38% of noninterest checking accounts are free. While the decline in the number of free accounts appears to have stabilized – the percentage is the same as it was last year — just five years ago 76% of these accounts were free.
Sadly, this doesn’t come as a huge surprise to us. Over the last year and a half, we’ve received over 200 stories from consumers concerned about overdraft fees. Many of them are particularly outraged that some banks continue to reorder transactions in a single day to collect as many overdraft fees as possible. For example, Angie from Aurora, CO, tells us:
“I am a 71 year old woman who is now jobless (for 2 years), without any more unemployment insurance, and on Social Security as my sole income. My bank . . . charges . . . $36 per overdraft, and in addition, charges $8 per each day that there is no deposit to cover overdrafts! . . . I ultimately had to declare bankruptcy to get out from under what I owed. I might have been able to manage without having to pay that bank such outrageous fees. And yes, this bank covered the highest withdrawal first, so that they could make the most money from my misfortunes! Each time I looked at my statement online, each debit had changed places with the others so that the money taken out of my account would be as high as possible! In addition, the bank made capricious choices about which debt they would honor, and which debt was unpaid, and this was totally inconsistent each month. And, yes, I was charged as many as 9-10 overdrafts each month!”
As bank fees rise, what can consumers do? Switching banks is one option – click here for tips on making the transition. As the AP points out, many credit unions, community and online banks still offer free checking services. And several banks, including GoBank, are pursuing or have made available overdraft-free, low-fee checking accounts to consumers. Click here for our analysis of these accounts.
But unfortunately, as Consumers Union outlined in its report, “Trapped at the Bank,” switching banks still can be a major hassle. We’re supporting legislation in Congress, the Freedom and Mobility in Consumer Banking Act, which would help streamline the bank-switching process for consumers. But we need your help — please show your support for this measure!
We’re curious about your experiences with ATM and overdraft fees. If you have a story, please share it here!