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Think small to get free checking

By Marcie Geffner ·
Friday, November 23, 2012
Posted: 6 am ET

Consumers who want a free checking account are more likely to find one at a small bank or credit union than at a big bank.

That's according to Big Banks, Bigger Fees: A National Survey of Bank Fees in 2012, a report released this week by the U.S. Public Interest Research Group, or PIRG, a Washington, D.C.-based federation of state nonprofit, nonpartisan public interest research and advocacy groups.

The report found that while more than 60 percent of small banks and credit unions offered free checking accounts, only 25 percent of big banks did so.

The report also found small banks had lower average checking account fees, overdraft fees and foreign or off-use ATM fees, and lower minimum balance requirements to avoid checking fees compared with big banks.

Ed Mierzwinski, consumer program director at U.S. PIRG, said in a statement that consumers should "reject the myth that the days of free checking are gone" and consider moving their money to a small bank or credit union to avoid "big fees at the big banks."

To collect their data, researchers went to 250 bank branches in 17 states and the District of Columbia to compare fees and find out whether banks were complying with a federal law that requires disclosure of all account-related fees to prospective customers. Bank fees were also obtained from an examination of websites to bring the total to 330 banks in 24 states and the District of Columbia.

The survey found full fee disclosure information was often hard to find online and could only be obtained in any form from 62 percent of the big banks and 29 percent of the small banks. Big banks were defined as those that have more than $10 billion in deposits.

Forty-eight percent of the banks gave researchers fee schedules as required by law on their first request. Seventy-two percent complied after two or more requests. Twelve percent refused to provide the information, claimed they didn’t have it or told researchers to "go online" to find fee disclosures.

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