Availability of No-Fee Checking Accounts Hits New Low in 2013

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The availability of no-fee checking accounts fell to new depths in the first half of 2013, according to a new survey from MoneyRates.com. Online banks continue to offer no-fee accounts at a sharply higher rate than their brick-and-mortar competitors.

When people bank online, banks save money on everything from the cost of sending out statements to the expense of staffing their branches. The amount of free online checking accounts reflects that savings.

Free checking account availability plunged in the first half of 2013, according to the latest Bank Fees Survey from MoneyRates.com. Only 30.31 percent of the checking accounts surveyed had no monthly maintenance fee, marking the lowest figure for this measurement since the survey began in 2009.

The percentage of no-fee checking was down sharply from the 36.6 percent figure recorded in the 2012 end-of-year survey. The lowest availability of no-fee checking accounts before the latest survey occurred in 2011, when it hit 34.7 percent.

Despite the fall in no-fee checking account availability, online banks continued to offer no-fee checking at a higher rate than traditional banks. Of the online accounts surveyed, 78.95 percent came with no monthly maintenance fee, compared to just 27.79 percent of the accounts from brick-and-mortar institutions.

Richard Barrington, CFA, senior financial analyst for MoneyRates.com, says that consumers shouldn’t be surprised to find that online banks offer no-fee checking accounts more frequently, largely because these institutions have lower costs than traditional banks.

“When people bank online, banks save money on everything from the cost of sending out statements to the expense of staffing their branches,” Barrington says. “The amount of free online checking accounts reflects that savings, and also represents an incentive for people to bank in more cost-effective ways.”

The survey also found that the average overdraft fee rose in 2013, climbing to $31.60. That figure was $30.01 at the end of 2012. Barrington says that consumers who have difficulty avoiding overdrafts may want to closely examine these fees before opening a new account.

“It’s conceivable that people who overdraft frequently could come out ahead by choosing a bank with relatively low overdraft fees, even if it means paying a higher monthly fee,” says Barrington. “However, the smarter thing to do would be to cut back on those overdrafts to begin with. Overdraft fees are a large and unnecessary expense.”

Consumers who seek lower overdraft fees may be wise to start their search online: The average overdraft fee at online banks was just $25.50, compared to the traditional bank average of $31.90.

For the full analysis, please see “Bank Fees Survey mid-2013: No-fee checking hits a new low.”

Methodology
The Bank Fee Survey is updated twice a year using data on checking accounts offered by banks in the MoneyRates Index. The MoneyRates Index is a composite of more than 100 banks, including the 50 largest U.S. banks by deposit amount and a similar number of smaller banks. This sampling was constructed to be broadly representative of the general banking environment.

About MoneyRates.com
MoneyRates.com has been a leading source of information on bank rates, personal finance, savings accounts and investing since 1999. The site provides the highest rates on certificates of deposit, money market accounts and high-yield savings accounts. MoneyRates.com is owned and operated by QuinStreet, Inc. (NASDAQ: QNST), one of the largest Internet marketing and media companies in the world. QuinStreet is committed to providing consumers and businesses with the information they need to research, find and select the products, services and brands that best meet their needs. The company is a leader in ethical marketing practices. For more information, please visit QuinStreet.com.

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Press Contact:
Alex H. Bryant
650.703.5214
pr(at)moneyrates(dot)com

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