Online banking still a better deal, but
not by muchSee
the most recent version of the checking study.
banks have always touted their interest-paying accounts, higher
yields and lower fees, but the differences between Web-based financial
institutions and their brick-and-mortar counterparts are diminishing.
Once again, 26 Internet institutions were surveyed
for this edition of the Checking Account Pricing Study. E*Trade
Bank, RBC Centura Bank and Flagstar Bank appear in both sections
of the study due to their significant size within one or more metro
Interest-bearing accounts are a strong feature
of Internet banks, and 32 of the 38 accounts surveyed are in that
Minimum to open
Opening an interest-paying account at an Internet bank has
gotten a bit cheaper since our last survey. The average minimum
required is $784.69. That's 3 percent less than in October, but
22 percent higher than a year ago. The average exceeds, but is still
comparable to, the $718.40 at traditional banks.
The average minimum to open a non-interest account
at an Internet facility is $91.67, slightly higher than the $74.98
required at brick-and-mortar banks.
Minimum to avoid fees
If you want to avoid paying fees on an interest account, you'll
have to keep a minimum balance of $1,239.10 in your account. That's
23 percent higher than last fall and a whopping 49 percent more
than was required a year ago. Still, it's little more than half
of the $2,330.60 required at traditional banks.
The average minimum required for non-interest
accounts remained at $225, below the average $352.65 required by
The lower rate environment has had an effect on Internet banks.
The average yield on interest checking has dropped
to 1.84 percent from 2.77 percent six months ago.
Nevertheless, that's still three times the average
paid by traditional banks.
Monthly service fees
Internet banks also have an advantage over traditional banks
when it comes to monthly service fees -- but the gap is narrowing.
The average fee for interest checking is $7.36.
That's an 11 percent increase since last fall,
and a 40 percent increase in the past year. The fee still compares
favorably to those at traditional banks where the average is $10.67.
The average fee on a non-interest Internet checking
account is $4.83, the same as six months ago. Traditional banks
charge an average $6.11 for the same account.
No service fees
Internet banks traditionally offer a higher percentage of accounts
that don't charge a service fee, but those accounts are disappearing
Twenty-two percent of interest accounts at Internet
banks don't charge a service fee, compared to 4 percent at traditional
But, just one year ago, 41 percent of interest
accounts at Internet banks didn't stick you with a monthly service
Among non-interest accounts, 33 percent don't
charge a service fee vs. 14 percent at traditional banks.
Internet banks still offer a higher percentage of free accounts
than traditional banks. Twenty-four percent of all Internet checking
accounts are free -- no monthly service charge or per item charges
no matter how little is in your account. That's a 5 percent drop
from six months ago, but still beats the 9 percent at traditional
Bounced check charges
When it comes to bounced checks, Internet banks aren't much
kinder than their brick counterparts. The average non-sufficient
funds (NSF) fee is $24.45 at Internet banks. That's 1.5 percent
less than six months ago, but 4 percent higher than a year ago.
Nearly all the checking accounts offer overdraft
Only four Internet accounts charge a per-item fee. Three of
the accounts allow 40 free transactions each month before the fee
kicks in, so it should be pretty easy to avoid the fee. The other
account allows 15 free transactions. In each case, the fee is 50
cents per transaction.
All 26 Internet institutions surveyed offer ATM cards, and
54 percent own ATMs, the same percentage as one year ago. The biggest
difference between Internet and traditional banks when it comes
to ATMs is that 85 percent of Internet banks don't charge their
customers for using another bank's ATMs, while 88 percent of traditional
banks do charge customers for using non-bank ATMs.
And most Internet banks, 62 percent, reimburse
their customers for surcharges assessed when using another bank's
ATM. This number has stayed fairly consistent for at least the past
Reimbursement varies by institution, but typically
involves a dollar limit or a certain number of transactions or both
that will be reimbursed each month. The most common arrangement
is up to four transactions of $1.50 per month, or up to $6 total
On the other hand, both Internet banks and traditional
banks surcharge non-customers for using the bank's ATMs. The average
at Internet banks is $1.37, same as the last study. Traditional
banks charge $1.47.
All 26 Internet banks allow customers to make
fee-free point-of-sale purchases. None
of the Internet banks charges an annual fee for an ATM card.
Debit cards are available at 85 percent of Internet banks,
down a bit from 88 percent last October. Ninety-five
percent of Internet banks have the same pricing for debit and ATM
cards, down from 96 percent in October.
-- Posted: March 28, 2002