Bankrate's 2012 Checking Survey was generally a pretty depressing read. About the only bright spot was that debit card fees like the type Bank of America floated at the end of last year never caught on. Everything else in the study pretty much added up to higher fees and more limited availability of what was once a market staple: free checking.
It's worth remembering, though, that the study is somewhat tilted toward large banks. We survey the top 10 institutions in 25 of the largest U.S. markets, which helps us get a snapshot of the fees experienced by a large chunk of checking account customers. But not all institutions are heaping on fees the way the largest banks are at the moment.
Right now, it seems that the smaller the institution, the less you'll pay to bank there. A Javelin Research report released in February found that midsize banks are charging more than a third less for basic checking than large banks.
Credit unions, which are typically nowhere near the size of the country's largest banks, are also much cheaper. Our Credit Union Checking Survey from this year found that 72 percent of credit unions are still offering free checking, down just 4 percent from the year before. Fees were also much lower, on average, including overdraft fees and out-of-network ATM fees.
As a fringe benefit, credit unions also pay much higher deposit rates. A study released this month by the National Association of Federal Credit Unions found that "interest rates on savings, money market, interest checking, and CDs were 25.5 percent higher at credit unions."
Unless you need an institution with a large network of branches and ATMs distributed in cities all over the world, it really doesn't make sense to pay a monthly fee for basic checking, especially since mobile banking, online banking and ATM sharing have diminished the value of brick-and-mortar assets.
What do you think? Is smaller better when it comes to financial institutions?