Americans with annual household income under $30,000 and a checking account pay an average of $31 per month in bank or credit union fees, according to a Bankrate.com and MONEY survey.
That's more than three times as much as the $9 typically paid by other income brackets (these figures include routine service charges, ATM fees and overdraft fees).
Another shocker, just 59% of U.S. adults with household income under $30,000 per year even have a checking account (compared with 83% of all others).
Bankrate.com recently reported that the average out-of-network ATM withdrawal costs $4.69 and the average overdraft fee is $33.38. Just 38% of financial institutions offer free checking accounts to all customers. The rest typically charge a monthly fee (often $12), waived under specific conditions. But these stipulations can be problematic for low-income households (the most common are direct deposit and keeping at least $1,500 in the account).
While 63% of checking accountholders avoid bank fees, one-third of those who pay fees cough up at least $26 per month, and they're disproportionately from households with lower income and education levels. A CFPB study found 9% of accountholders overdraft 10+ times per year; they shoulder 79% of banks' total non-sufficient funds fees.
Many people also pay checking account fees because they're stuck in an account that no longer fits their lifestyle. The average checking accountholder has been using that same account for about 16 years. Members of the Silent Generation have held onto their accounts for the longest (30 years, on average), and Baby Boomers aren't too far behind (21 years). Older millennials (27-36-year-olds) have been using the same checking account for an average of approximately 8½ years.
"It can be hard to commit to a haircut, diet or job, but it seems like the opposite is true with banking," Bankrate.com analyst Amanda Dixon said. "Being loyal to a bank is fine if you're getting a good deal. But it's smart to shop around because the bank you've used for decades may not offer the best savings rates, ATM access or mobile app."
The survey, conducted by Princeton Survey Research Associates International, found the most popular reason for choosing a bank or credit union in the first place is convenient branch or ATM locations. The most common reason to stick with a financial institution is its customer service.
Bankrate.com gathered checking and savings account data from 75 brick-and-mortar banks, 50 credit unions and 15 online banks. That included more than 800 accounts and 18,000 data points. Criteria included monthly service fees, interest rates, ATM/branch access, ATM fees, minimum deposit/balance requirements and mobile app ratings.
Bankrate.com and MONEY also teamed up on a series of Best Banks lists. The winners are:
- Best Credit Union: Alliant Credit Union
- Best Online Bank: Bank of Internet
- Best Big Bank: Capital One
- Best Regional Bank: Banner Bank
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Roy Urrico
Roy W. Urrico specializes in articles about financial technology and services for Credit Union Times, as well as ghostwriting, copywriting, and case studies. Also: writer/editor of a semi-annual newsletter for Association for Financial Technology since 1997 and history projects funded by the U.S Interior Department, National Park Service and Warren County (N.Y.).
