Bankrate checking study finds more, higher fees
By Laura Bruce • Bankrate.com

Punitive fees have reached new highs and continue to siphon money out of consumers' checking accounts.

Also, it still costs more to open a checking account at an Internet bank, but after that initial investment you'll earn higher interest, pay lower service fees and need less money in your account to avoid those fees.

Those are some of the findings from the fall 2003 Bankrate.com national survey of checking accounts.

Finding the best checking account requires knowing your checking account habits. The right account is an extremely useful financial tool. The wrong account is like a paper cut -- you can't stop the bleeding. In this case, it's money bleeding out of your account every month, every time you use an ATM, every time you use any of a slew of banking services.

Before we look at the results, it should be noted that one of Bankrate's newest features is an extensive database to help you find the checking account that best fits your needs. More than 1,500 checking accounts offered nationwide in 152 markets of all sizes are canvassed daily. Whether you live in New York or California or somewhere in between, you can find the best deal in your area by clicking here.

For an overall view of the costs involved in owning a checking account, we continue to evaluate the data we receive from the top 10 institutions in the 25 largest markets. We have revised our survey in that we now compare one interest-paying and one noninterest checking account from each institution. The accounts selected are the ones that can be opened for the lowest minimum deposit.

As always, we continue to survey a group of Internet banks to see how online checking accounts compare to those at traditional banks. This survey includes 29 online accounts from 18 institutions.

As in previous surveys, we find that certain fees keep consumers digging deeper into their pockets. Once again, the main culprits are ATM fees and bounced-check fees.

ATM fees -- brick-and-mortar banks

No matter where you live, ATM fees will soak you if you use a machine that isn't owned by your bank. Use another bank's ATM and you'll pay an average surcharge of $1.40. That's a new high, up from $1.37 in spring 2003, and up a whopping 57 percent from the average of $0.89 charged five years ago.

Thanks in part to Washington Mutual's repeal of surcharges nationwide, the percentage of institutions that levy a surcharge has dropped in the past 18 months from 94.9 percent to 92.8 percent. That's a difference of five institutions that no longer assess surcharges.

The average fee to use a non-bank ATM dipped to $1.29 from $1.30 since spring 2003. But taking a longer-range look, the average fee for a withdrawal from a non-bank ATM has jumped 19 percent in the past five years, from $1.08 to $1.29.

Checking Accounts: Brick-and-mortar banks

Bounced-check fees
Nonsufficient funds fees, better known as bounced-check fees, are now averaging $25.80. That's up from $25.52 in the spring and 20 percent higher than the $21.57 average of five years ago. By contrast, the Consumer Price Index is up less than 13 percent in the same period.

Minimum to open
The average minimum to open a checking account and earn interest hit a new high, up 17 percent since Spring 2003 to $494.73. The average minimum to open a noninterest account is $59.49. That's consistent with the $55.39-$67.37 range we've seen in the past five years.

Monthly service fees
If you want to avoid monthly service fees on an interest-bearing account, be prepared to keep a staggering $2,257.82 average balance. That's up 12 percent since spring and more than 44 percent higher than what was required five years ago.

You're much better off opting for the noninterest account, where you'll have to keep a much more reasonable average of $245.37 to avoid fees. That number, in fact, is down 31 percent since spring and is less than half of the $564.69 peak we saw in spring 2000.

The average monthly service fee for interest accounts has hit a new high of $10.86, up from $10.68 in the spring. The average for noninterest accounts is $3.72.

Yields
The ever-declining interest-rate environment puts the current average yield at 0.27, down from 0.39 percent in the spring and down from 1.01 percent in fall 2000 before the interest rate cuts began.