Big Banks, Bigger Fees: What Colorado Banks are Charging

11/1/2001

Executive Summary

Consumers could save at least $75 each year by banking at a small bank or credit union instead of a big bank, according to a national report released today by the Colorado Public Interest Research Group (CoPIRG).

According to the report, the average annual cost of regular checking at big banks was $266, but only $191 at small community banks, and only $101 at credit unions. At the same time, the groups found an increase in the number of banks offering free checking accounts, giving consumers the chance to save money if they shop around.

"Big banks lead the way in nickel-and-diming consumers with new fees for this and higher fees for that," said Emily Hoopes, Consumer Advocate for CoPIRG. "Banks increase fees, they invent new fees, and they make it harder to avoid fees. In the end, consumers pay more and more."

The groups charged that many banks are hiding fee increases, by charging a la carte for services that once were standard with checking accounts, such as charging a monthly ATM card rental fee.

"More and higher bank fees have left at least 12 million American families unable to afford bank accounts," said Hoopes, "Unless banks are required by law to offer affordable accounts, most banks will not."

KEY FINDINGS:

• Among 521 banks and 144 credit unions surveyed in 32 states and DC, the report found that Colorado ranks #8 overall in PIRG's ranking of regular checking account annual costs at $196 average per year spent on regular checking.
• Nationally, states with both high fees overall and few free checking options included Florida, North Carolina, South Carolina, and New York. States with low fees overall and significant free checking options included Massachusetts, Montana, and Washington State.

ATM CARD RENTAL FEES:

• Nationally, the survey found that 22% of banks are now charging an annual fee for either an ATM card or an ATM debit card. For all banks, the fee averages $13.28 each year. However, the survey also found that, while 50% of small banks and 93% of credit unions often offer some or all free transactions if they impose an annual ATM fee, only 11% of big banks do.

FREE CHECKING ACCOUNTS

• In Colorado, 47% of banks surveyed offered either free checking without any restrictions or free checking with direct deposit. Nationally, 29% of banks offered totally free checking, up from 17.5% in 1999. By comparison, the survey found that 67% of credit unions offer totally free checking.
  Among the other local findings of the report:
• Among the 7 Colorado Banks that offer special accounts for senior citizens the average monthly fee was $3.43, compared to the national average of $1.76.

"We urge consumers to shop around for bank fee deals. Your best bet is usually at a credit union or small bank," added Hoopes. "Wherever you bank, look for free checking, or free or low-cost checking with direct deposit or by linking your checking account to another account. Be wary of interest bearing NOW checking accounts, where your fees will offset meager interest payments, unless you keep a very high balance."

CoPIRG called on Congress to ban ATM surcharges, require banks to offer low-cost accounts and renew an expired requirement that the Federal Reserve Board continue to study bank fees. CoPIRG also sent a letter from its Washington, DC office to the Federal Reserve, asking it to require banks to disclose fees on the Internet.