Survey Shows Checking Maintenance Fees Cost U.S. Households at Least $3.5 Billion in 2017

debit cards

MyBankTracker conducted an ongoing survey regarding checking account usage during the calendar year of 2017 with 21,186 respondents in the United States.

According to the U.S. Census Bureau with 2013 data, Table 2 (updated Nov. 2017), 110,901,468 U.S. households own a checking account.

MyBankTracker survey data shows 63 percent of Americans have less than $1,000 in their checking accounts, which turns out to be 70,599,875 U.S. households, when applied to the U.S. Census data.

According to the FDIC, the top five U.S. banks own 61 percent of the total FDIC-insured deposits in the country, which means there are 43,065,924 U.S. households with a checking account of less than $1,000 held at one of the top five U.S. banks.

Each of the top five U.S. banks offers a basic checking account that requires at least $1,500 to waive the monthly fee. The average monthly fee of these five basic checking accounts is $10.99.

The MyBankTracker survey found that 39 percent of Americans use direct deposit.

Assuming that all of these direct deposits fulfill fee-waiver requirements, 61 percent of Americans cannot avoid the monthly fee with the direct deposit method, which is the case for 26,304,667 U.S. households with a checking account of less than $1,000 at one of the top five U.S. banks with no direct deposit.

If each of the 26,304,667 U.S. households paid an average monthly fee of $10.99, they would have paid a combined $3,428,597,095 in 2017.

37 Percent of Customers Received at Least One Overdraft Fee in 2017

Up to 37 percent of checking account customers received at least one overdraft fee in 2017; seven percent received five plus overdrafts per year.

According to the U.S. Census Bureau from 2013, data Table 2 (updated Nov. 2017), 110,901,468 U.S. households own a checking account.

Using the MyBankTracker survey data collected in 2017, the percentage disbursement of overdraft fee incidents was applied to the U.S. Census data (i.e., seven percent of U.S. households paid at least five overdraft fees in 2017).

The average overdraft fee at the top 10 U.S. banks is $35.20.

Trends

  • The percentage of people considering a new checking account who have a daily balance of less than $1,000 is decreasing
  • Usage of direct deposit and mobile deposit is increasing
  • Percentage of people considering a new checking account with at least one overdraft incident (in the prior year) is increasing
  • Percentage of people considering a new checking account who seek lower checking account fees is decreasing
  • Percentage of people considering a new checking account who care about customer reviews on checking accounts is increasing

Percentage of respondents who’ve had a daily balance of less than $1,000

Year Percentages
2016 66.07%
2017 63.66%
2018 59.45%

Percentage of respondents who’ve had at least one overdraft incident (past year)

Year Percentages
2016 35.21%
2017 36.48%
2018 36.95%

Percentage of respondents who relied on the following factors when picking a bank

Year Customer reviews Low fees
2016 16.67% 49.52%
2017 20.63% 48.50%
2018 21.51% 42.90%

Percentage of respondents who used the following methods to make deposits

Year Mobile deposit Direct deposit
2016 11.96% 32.95%
2017 10.37% 38.92%
2018 14.14% 39.25%

Ways to Avoid Monthly Fees

Typically, checking accounts have more than one way to waive their monthly maintenance charges.

The primary method is to meet a minimum balance requirement. For a basic checking account at one of the major U.S. banks, you may need to keep a balance of $1,000 to $1,500.

Other ways usually include direct deposits, debit card purchases, and customer age.

Direct deposits

Direct deposits include recurring electronic deposits that come from an employer or government benefits. Consumers should request that they receive their paychecks via direct deposit to help meet this requirement.

Depending on the bank, the direct deposits must total a certain amount per month.

Debit card purchases

Make a certain number of purchases or payments (e.g., online shopping or bills) with your debit card and you could meet the fee waiver requirement to avoid monthly fees.

Customer age

Some basic checking accounts will waive monthly fees for customers of a certain age.

Generally, seniors and young adults (those under age 21) are exempt from having to pay the monthly fee.

Minimize the Cost of an Overdraft

Overdraft fees are one of the most expensive bank fees that punishes customers for not having enough money in their accounts.

Big banks charge $35 to $38 per overdraft.

However, there are ways that bank customers can avoid and/or minimize the cost of overdrawing their checking accounts.

Opt out of debit card coverage

Federal regulations require that customers give consent to the bank to overdraw their accounts. Without such consent, the bank will reject point-of-sale or ATM transactions that will result in a negative account balance.

The bank can still approve written checks that overdraw checking accounts.

But, by opting out, you’ll reduce the likelihood of overdrafts and overdraft fees.

Consider an overdraft line of credit

An overdraft line of credit is offered by some banks as an alternative to an expensive overdraft fee.

Instead of a flat fee, the customer will pay interest on the amount that is overdrawn. As long as the negative balance is corrected soon, customers are probably going to pay much less than the standard overdraft fee.

Use overdraft protection transfers

By linking a checking account to a savings account at the same bank, customers can use funds in the saving account to cover a transaction that would lead to an overdraft.

This is called an overdraft protection transfer, which does have a fee -- usually around $12 each. It is still a fee that consumers should try to avoid but it is -- again -- cheaper than a regular overdraft fee.

Use Online Banks

Online banks do not have to pay the operating costs of running physical locations, including branch and ATM networks.

Because they don’t have these business expenses, online banks can afford to charge fewer and lower fees, in addition to offering attractive account perks.

Lower fees

Online checking accounts tend to have no monthly fees, so there’s no need to worry about fulfilling any fee waiver requirements.

Other account fees are either lower or nonexistent. Overdraft fees are lower at online banks while overdraft protection transfers may be completely free.

Rather than keeping a large balance in a checking account to avoid the monthly fee, consumers can put that money in an online savings account, which pays significantly more interest than a brick-and-mortar bank.

Consumers can even consider online checking accounts that reimburse any ATM fees incurred by customers when using any ATM. This opens up the flexibility to use any ATM available -- not just the one run by the bank.

More perks

Consumers can consider online checking accounts that reimburse any ATM fees incurred by customers when using any ATM. This opens up the flexibility to use any ATM available -- not just the one run by the bank.

Additionally, online checking accounts tend to have less stringent limits on certain transactions. For example, online banks allow customers to use mobile check deposit for larger check amounts.

Methodology

MyBankTracker conducted an ongoing survey regarding checking account usage during the calendar year of 2017 with 21,186 respondents in the United States.

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