First, there is not a huge variation in a particular fee for the 25 different cities. I suspect this is because the survey is only five of the largest banks. If the survey included smaller banks, I would expect much more variation. The big banks see their competition as other big banks and try to be "competitive" on fee pricing with their peer banks. Smaller banks and credit unions would have quite different fee levels I would expect.
What factors affect the variation in fees for different states and cities?
Part of the city-to-city variation is due to state laws in certain areas, but this is hard to specify beforehand.
What measures would you suggest consumers take to avoid such penalties in their checking accounts?
Bank customers who are worried about these fees should price these same fees with community banks in their locales. Many community banks have much lower fees than large banks in certain areas. Shopping around can be worthwhile in the banking industry.
Thank you, professor Hein, for your analysis of the checking account fees survey chart.
Professor Scott Hein also serves on the faculty of the Graduate School of Banking at Colorado, and the Southwestern Graduate School of Banking at SMU. He is also co-author to a reference book, "The Stock Market," with Rik W. Hafer, Greenwood Press. Beginning 2012, professor Hein along with Texas Tech finance professors, Mercer and Winters, will become co-editors of the Journal of Financial Research.