Consumers today pay significantly higher bank fees than they did 10 years ago.
That statement might seem obvious to many consumers. But now it's a matter of statistical record as well, according to a new report, "The Cost of Regulation: The Necessity of Bank Fees," from Javelin Strategy and Research, a financial institution consulting firm in San Francisco.
Bank customers in 2012 pay 26 percent more in fees for basic demand deposit accounts and 53 percent more for returns of deposited items than they paid in 2002, the report found. Monthly account fees, in-network ATM fees and out-of-network ATM fees, the most common fee-based components of a basic account, increased more than 20 percent over the past five years alone.
- Large banks typically charge higher fees for basic checking.
- Mid-sized banks charge less than two-thirds of what the top 10 largest banks charge.
- Only a small percentage of consumers regularly incur overdraft charges.
The report also found an upside. Though financial institutions are charging higher fees, they're also offering more value-added and technology-based services such as expedited payments, alerts and mobile banking.
Javelin President Jim Van Dyke said in a statement consumers need to adjust their expectations concerning banks' fees and services.
"Larger financial institutions typically offer 24/7 multichannel convenience, while community banks and credit unions commonly offer free checking or lower monthly account fees and more personalized customer service," Van Dyke said. "Financial institutions can help consumers understand which specific banking services align with their financial behaviors to maximize the value of the services they use."
The report was based on a review of bank fees and entry-level checking products offered by 30 top consumer banks, mid-sized banks and community banks.
In the report, Javelin identified "transparency," aka simple disclosure, as an important strategy for banks to communicate with consumers about fee structures. The report also offers financial institutions suggestions they can use to communicate information about fees in a positive way.
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