New Report Finds Direct Deposit is Key to Avoiding Rising Bank Fees


We support reforms to the financial marketplace that protect consumers from unscrupulous banks and lenders.

By Consumers Union on Wednesday, October 17th, 2012

The Consumer Federation of America just released a new report finding that consumers are having difficulty avoiding rising checking fees unless they directly deposit regular income checks such as paychecks, pension checks, and Social Security checks. 

In a survey of the top 25 banks by number of branches,  CFA found that checking account fees and policies range widely – but all in all, it is more difficult for customers with low balances to avoid monthly fees because of stricter minimum balance requirements at these banks.  The report found that many interest and noninterest-bearing checking accounts require consumers who are unable to maintain average balances of $1,500 — a large majority of checking customers — to pay regular monthly fees that total as much as $300 annually. Just triggering one debit card overdraft, having one check returned for insufficient funds, and having one deposit rejected could add an additional nearly $100 in charges to the annual cost of using a checking account.

For those who can’t meet the minimum balance requirements, banks typically waive monthly fees if the consumer sets up direct deposit of wages or public benefits like Social Security – but for those who don’t have funds that they can direct deposit into an account, the fees may be pricing them out of bank accounts at major financial institutions.

These findings shed extra light on the ongoing problem we’ve been talking about regarding big bank feesAs we recently told you, bank fees are on the rise but most community banks and credit unions still offer free checking account products that have no strings attached.  If you’re a low-balance customer or someone who doesn’t have direct deposit, you may want to look beyond the big banks for a better deal.



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