By using DepositAccounts.com’s proprietary database of depository product data, checking account fee data from 1,711 banks and credit unions with branches in the 50 of the largest U.S. metro areas was analyzed. Checking account fee data from online banks was also analyzed. The study focused on three of the common checking account fees: overdraft fees, third-party ATM fees and monthly service fees. An overview of the findings for the regional analysis is as follows:
- Florida has some of the highest bank fees overall – with West Palm Beach, Orlando, Tampa, and Miami topping the DepositAccounts.com Bank Fee Burden Score.
- Oklahoma City, Salt Lake City, Kansas City, and St. Louis have some of the lowest fees in the country, with the lowest Bank Fee Burden Score among the 50 metros DepositAccounts.com analyzed.
- Harrisburg has the highest overdraft fees at $36.14 versus the national average of $33.97
- Philadelphia has the highest third party ATM fees at $2.58 versus the national average of $2.28.
- New Orleans has the highest monthly fees at $7.17 versus the national average of $4.58.
Lowest Fees at Online Banks and Credit Unions
For all three fees, online banks had the lowest fee averages. Credit unions’ averages were higher, and the average fees at brick-and-mortar banks were the highest. This study shows that consumers will benefit from lower checking account fees by choosing online banks and credit unions over brick-and-mortar banks.
The average overdraft fees at online banks, credit unions and brick-and-mortar banks were close to each other. The averages ranged from $27.37 for online banks to $34.91 for brick-and-mortar banks. The average overdraft fee for credit unions ($29.22) was between the two, but it was closer to the online bank average than the brick-and-mortar bank average.
More variation occurred in third-party ATM fee averages. These ranged from $0.30 for online banks to $2.41 for brick-and-mortar banks. The average fee for credit unions was $1.46. The variation was attributed a number of online banks and credit unions which do not charge third-party ATM fees. These brought down the averages at both online banks and credit unions.
There was also a large variation between the averages of monthly service fees. These averages ranged from $0.78 for online banks to $5.12 for brick-and-mortar banks. Credit unions fell in the middle with an average of $1.38. The low averages for online banks and credit unions were due to institutions with checking accounts that had no monthly service fees.
Ranking Cities by Bank Fee Burden
The study also looked at these common three average fees at banks and credit unions in the 50 largest U.S. metro areas. The metro areas were ranked based on a score that combined the average overdraft fee, third-party ATM fee and monthly service fee. This Bank Fee Burden Score provides a simple way to compare between the major metro areas. The larger the Score value, the larger the fees.
The metro area with the smallest Bank Fee Burden Score was Oklahoma City. Out of the 50 metro areas, Oklahoma City ranked #2 for lowest overdraft fees, #1 for lowest third-party ATM fees and #5 for lowest monthly service fees. The other four of the top five metro areas with the smallest Bank Fee Burden Score include Salt Lake City, Kansas City, St. Louis and San Antonio.
The metro area with the largest Bank Fee Burden Score was West Palm Beach. Out of the 50 metro areas, West Palm Beach ranked #4 for the highest overdraft fees, #4 for the highest third-party ATM fees and #3 for the highest monthly service fees. The other four of the top five metro areas with the largest Bank Fee Burden Score include Orlando, Tampa, Miami and Phoenix.
Cities with the Highest and Lowest Overdraft Fees
The five metro areas with the highest average overdraft fees were Harrisburg, Pittsburg, Cleveland, West Palm Beach and Cincinnati. The average overdraft fees of these metro areas ranged from $35.04 in Cincinnati to $36.14 in Harrisburg.
The five metro areas with the lowest average overdraft fees were Salt Lake City, Oklahoma City, Raleigh, Kansas City and Seattle. The average overdraft fees of these metro areas ranged from $32.33 in Seattle to $29.01 in Salt Lake City.
One interesting thing to note is the large variance in the average overdraft fees between metro areas. For example, Harrisburg has an average overdraft fee of $36.14 which is $7.13 higher than the average overdraft fee in Salt Lake City.
An important reason for the large variance in average overdraft fees between metro areas is the type of institutions that dominate the metro area. When credit unions make up a large percentage of the banking institutions in a metro area, the average overdraft fees are less than when banks make up a large percentage. As described above, average overdraft fee from credit unions ($29.22) is much less than the average at brick-and-mortar banks ($34.91).
Cities with the Highest and Lowest ATM Fees
The five metro areas with the highest average third-party ATM fees were Philadelphia, Cleveland, Indianapolis, West Palm Beach and Columbus. The average third-party ATM fees of these metro areas ranged from $2.45 in Columbus to $2.58 in Philadelphia.
The five metro areas with the lowest average third-party ATM fees were Oklahoma City, New Orleans, St. Louis, Kansas City and San Antonio. The average third-party ATM fees of these metro areas ranged from $1.94 in San Antonio to $1.31 in Oklahoma City.
Cities with the Highest and Lowest Monthly Service Fees
The five metro areas with the highest average monthly service fees were New Orleans, Las Vegas, West Palm Beach, Miami and Phoenix. The average monthly service fees of these metro areas ranged from $6.24 in Phoenix to $7.17 in New Orleans.
The five metro areas with the lowest average monthly service fees were Harrisburg, Grand Rapids, Salt Lake City, Cleveland and Oklahoma City. The average monthly fees of these five metro areas ranged from $3.06 in Oklahoma City to $2.39 in Harrisburg.
Tips to Reduce and Avoid Fees
As can be seen in this study, one way to reduce and avoid bank fees is to use online banks or credit unions instead of brick-and-mortar banks. Checking accounts at online banks and credit unions tend to have lower overdraft fees, ATM fees and monthly service fees than checking accounts at brick-and-mortar banks. Also, they are more likely not to charge third-party ATM fees or monthly service fees.
Avoiding Overdraft Fees
Unlike ATM fees and monthly service fees, the overdraft fee is rarely zero. Banks that do advertise no overdraft fees will automatically decline any withdrawals that would cause a negative balance. If a bank covers an overdraft, a substantial overdraft fee is common, even at online banks. Thus, the best way to reduce the amount paid in overdraft fees is to avoid overdrafting.
Banks and credit unions that offer free overdraft transfers can help consumers avoid overdraft fees. An overdraft transfer takes place when an overdraft occurs on a checking account and an amount necessary to cover the overdraft is automatically transferred from the consumer’s savings account to the checking account.
Even an overdraft transfer can’t help a consumer when both the checking and savings accounts have low balances. To avoid withdrawals that could cause an overdraft of both the checking and savings accounts, account alerts can be useful. Many banks and credit unions allow the customer to set up alerts that will text or email a warning when an account balance falls below a specified level.
Avoiding ATM Fee
Using an ATM can involve two types of fees. The first is the third-party fee which your bank will charge you when using another bank’s ATM or an ATM that’s outside of your bank’s network. The other fee is called an ATM surcharge, and that isn’t charged by your bank. It’s charged by the ATM owner, and it’s common when using an ATM that isn’t owned by your bank or is outside of your bank’s network.
When choosing a checking account, there are a few things to consider that will help you reduce how much in ATM fees you pay. First, it’s important that the bank or credit union offer a large ATM network that provides free ATM withdrawals. Large banks may be able to provide their own large ATM network. Others will need to partner with an ATM network provider such as Allpoint. Many credit unions are part of the CO-OP ATM network.
Another way banks and credit unions can save you on ATM fees is by not charging you a third-party ATM fee when using an ATM that’s outside of its network. As discussed above, this is more common at credit unions and online banks. Lastly, some banks and credit unions offer checking accounts with ATM surcharge refunds. If another bank charges you when using their ATM, your bank will refund you the surcharge amount.
Avoiding Monthly Service Fees
If a checking account has a monthly service fee, the bank or credit union will often provide ways to have that fee waived such as maintaining a minimum balance or direct deposit. You may not worry about monthly service fees when it’s easy to have the fee waived, but if your situation changes such as being hit by a job loss, a monthly service fee may become much harder to avoid. Thus, the best way to avoid monthly service fees is to choose free checking accounts that have no monthly service fee.
Searching for Free Checking Accounts to Save on Fees
The best way to save on bank fees is to choose a free checking account with low overdraft fees and ATM fees. However, the importance of overdraft fees and ATM fees depend on the individual’s behavior. Those who are diligent in maintaining adequate balances may not need a checking account with low overdraft fees. Likewise, those who rarely need ATMs won’t benefit from free ATMs.
This checking finder tool at DepositAccounts.com can help consumers find the best free checking account based on their behavior. By entering the number of times that you expect to overdraw your account or the number of times you expect to use an out-of-network ATM, the tool will find the best free checking account to save you the most money. The tool also factors in the impact of interest rates on the overall savings based on the checking account balance that one expects to maintain.