Bankrate's fall '06 checking study: Fees rise
Noninterest accounts bearable
Noninterest accounts are the place to look. More than 60 percent
of noninterest accounts surveyed have no balance requirement or
monthly service fee, two key markings on the trail toward finding
free checking accounts.
There is good news on the ATM front. Although surcharges
cost more, banks are increasingly cutting their own customers a
break on certain accounts by eliminating fees when using someone
else's ATMs. As a result, the percentage of banks assessing other-banks'-ATM
fees fell for the third consecutive survey, plunging to the lowest
level yet, 77 percent. Ironically, the waivers on these fees popped
up only on interest accounts, so you can bet that more often than
not, the break comes with a downside -- a sizable balance requirement.
The results of the Bankrate.com checking account survey can be
summed up this way -- consumers continue to encounter stiffer fees
and higher balance requirements. Fortunately, there are several
lines of defense.
How to avoid those fees
To avoid bounced-check charges, consumers must be very diligent
about recording transactions in their check registers, particularly
routine purchases made with debit cards. And with the prevalence
of online account access, it is feasible to reconcile your account
balance before writing a check or making a payment that could potentially
overdraw the account. Signing up for overdraft protection, ideally
linked to a savings account, is a low-cost way to avoid the embarrassment
of bounced checks.
There is no need to maintain a large balance in a low-yielding
checking account when so many accounts come without balance requirements
or fees. So what if they happen to be noninterest accounts? Who
is going to sweat about missing out on an average yield of 0.34
Instead, devote your excess savings to a high-yield
savings or money
market account where you preserve the ability to access
money when needed, but earn substantially higher returns than those
offered in checking accounts.
While more banks are permitting customers to go to
another bank's ATM without charge, those transactions don't come
without a cost. ATM surcharges are higher and more prevalent than
ever, and even the "deal" some banks give by allowing
free nonbank-ATM withdrawals requires maintaining a large balance
in a low-yielding checking account. By settling for average interest
earnings of 0.34 percent instead of the 5 percent returns available
in a savings or money market account, an account holder forfeits
more than $100 per year in interest earnings on a $2,500 balance.
It takes a lot of ATM withdrawals to make up for that,
and you'll still have a hard time avoiding surcharges. Instead,
it pays -- literally -- to manage your ATM withdrawals more proactively.
Plan to take money out of only your bank's ATM, planning ahead so
the withdrawal can take place in the normal course of a workday
or weekend when you'd otherwise be near your bank's ATM. This sure
beats waiting until you're really in a pinch for cash, then having
to make the withdrawal on another bank's turf.
To find the best checking account in your area, compare
using Bankrate's search engine.
You can also search
on Bankrate for checking account offerings available at Internet