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Checking Study: Checking accounts


See the most recent version of the checking study.

There is a certain consistency in the key findings from Bankrate.com's Spring 2005 Checking Account Pricing Study.

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Pretty much everything you look at costs more than it did before.

The bounced-check fee has risen 5 percent in the past six months, while average fees and minimums are up even more. But one number has barely budged: the yield banks pay account holders.

Here's a look at some of the key findings from the study that surveyed 246 interest accounts and 212 noninterest accounts in this edition.

Average yield

Average yield: Don't pick a checking account because you're hoping to earn interest. The interest is merely a token, and yields do not rise commensurate with returns in other investments.

Case in point: The Federal Reserve had raised interest rates six times by a total of 1.5 percentage points between June 2004 and the date of the survey, March 18, 2005. That compares with the average yield on interest checking accounts, which in the past year has increased by a pittance from 0.26 percent to 0.28 percent. The average yield plummeted from 1.35 percent to 0.26 percent between 1998 and 2004.

Average minimum to open interest-bearing account

Average minimum to open interest-bearing account: The average minimum balance required to open an interest-bearing account remains in a consistent range seen over the past five years.

The current average of $445.54 is up only slightly from $441.58 in fall 2004. Since 2001, the average has remained between $418.78 and $494.73.

Average minimum to open noninterest account

Average minimum to open noninterest account: The average minimum balance required to open a noninterest account has historically been a model of consistency, remaining within a narrow range. But this time was different as the average climbed nearly 28 percent to a new high.

Even now, the average of $72.72 is very modest. The average last fall was $56.97, and in the six years prior to this survey the average fluctuated between $55.39 and $67.37.

Average minimum to avoid fees in an interest-bearing account

Average minimum to avoid fees in an interest-bearing account: The average minimum balance required to avoid fees surged 10 percent to $2,295.85. While this is short of the record average of $2,425.83 one year ago, it is higher than anything seen prior to 2004. This average highlights the unattractiveness of interest checking accounts, as the account holder must strand nearly $2,300 in the account just to avoid a monthly service fee. As a reward, the account holder earns a scant 0.28 percent. The average balance requirement has increased 45 percent in the past six years from $1,586.57 to $2,295.85.

Average minimum to avoid fees in a noninterest account

Average minimum to avoid fees in a noninterest account: After declining steadily for the past five years, the average balance requirement to avoid fees on a noninterest account jumped nearly $100 to an average of $301.47. This is up 46 percent from $206.33 in the fall and is the highest in two years. The increase was largely attributable to an increase from eight to 20 in the number of accounts requiring a balance of $1,000 or more to avoid fees. But the number of accounts that charged a fee regardless of balance fell from 59 to 43. All in all, even though the balance requirement climbed, it is better to have a threshold balance that will avoid fees than to face them regardless of the balance. More accounts now give the account holder a way to avoid the fee. At the peak five years ago, the average balance requirement for noninterest accounts was $564.69.

Average monthly service fee for interest-bearing account

Average monthly service fee for interest-bearing account: The average monthly service fee hit a record high of $11.08, up 4 percent from $10.61 in the last survey. The monthly service fee has long been a deterrent from opening an interest-bearing account. In the past six years, the average fee for interest-bearing accounts has increased 22 percent, from $9.10. Prior to fall 2003, the monthly service fee that was gathered included any additional fee for the return of canceled checks or image statements.

Average monthly service fee for noninterest account

Average monthly service fee for noninterest account: For the first time in four years, the average monthly service fee for a noninterest account has increased since the prior study. The average fee increased slightly, from $3.34 to $3.42, since the fall. The average monthly service fee is still well below the $5.10 of four years ago, owing to the widespread introduction of free checking accounts in recent years. Free checking accounts have been primarily a noninterest phenomena, so the same trend has not been seen on interest accounts. Prior to fall 2003, the monthly service fee gathered included any additional fee for the return of canceled checks or image statements.

Average bounced-check fee, aka non-sufficient funds (NSF) fee

Average bounced-check fee, aka non-sufficient funds (NSF) fee: The average bounced-check fee jumped 5 percent to $27.13, hitting a new record high. In the past six years, the average bounced-check fee was up 24 percent from $21.81. The march higher has been very steady, interrupted only once when the average declined from $25.80 in fall 2003 to $25.63 in spring 2004. In every other instance, the average established a new high with each study.

Online access

Online access: Online account access is to be expected, as it is now offered by 97 percent of accounts.

Online access has grown steadily, from just under 89 percent in fall 2001 to 96 percent one year ago, where it remained until the latest edition of the survey pushed it to a new high.

 
-- Posted: May 11, 2005
     

 

 
 

 

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NATIONAL OVERNIGHT AVERAGES
Interest checking 0.48%
MMA 0.39%
$10K MMA 0.35%



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