Study: Bigger Banks, Bigger Fees

ByMartin Crutsinger

W A S H I N G T O N,  Aug. 3, 2000 -- America’s largest banks charge significantlymore for services than smaller banks that do business in only onestate, the Federal Reserve has found in an annual survey of bankfees.

The Fed report, released Wednesday, also found that the numberof banks offering free checking account services dropped to 10.8percent in 1999, compared with 17.3 percent in 1998.

The number of savings and loans with free checking accountservices rose to 30 percent last year, compared with 23.4 percentin 1998.

On the difference in fees between big banks that operate in anumber of states and small banks, the Fed said, “Most of the feescharged by multistate banks were on average significantly higherthan those charged by single-state banks.”

The Fed report found the average bounced check fee at asingle-state bank was $17.04 last year, compared with $21.80charged by big banks.

Small banks charged on average $14.50 for a stop-payment order,compared with $20.10 for big banks, the central bank found.

Many Services No Longer Free

The survey, based on inquiries with 1,000 financialinstitutions, also showed that more banks offer minimum-balanceaccounts, in which customers pay flat monthly fees as long as theirbalances remain above a certain amount.

It found 40.6 percent of banks offering such accounts, comparedwith 35.6 percent in 1998. The average monthly charge dropped lastyear by 28 cents to $6.15, compared with $6.43 in 1998.

The latest report will be the Fed’s final survey on bank feesunless Congress reauthorizes the annual review.

Consumer advocates said the disparity illustrates a need forlegislative oversight.

“The report continues to show that bigger banks continue tocharge bigger fees,” said Edmund Mierzwinski, consumer programdirector for U.S. Public Interest Research Group.

Mierzwinski said his group, which also has studied bank charges,has found that more banks charge customers for services that oncewere free, such as assessments for transactions involving tellersor the return of canceled checks.

Pay as You Go

“Regular checking account service fees are not going up thatmuch, but banks are adding new fees. You are getting less butpaying more,” Mierzwinski said.

Banking industry officials defended the more prevalent fees as away to hold down basic charges.

John Hall, a spokesman for the American Bankers Association,said a survey the ABA did last month showed that 59 percent of bankcustomers pay $3 or less for monthly bank services.

“Bank fee structures have really gone from a one-size-fits-allapproach to a pay-as-you-go approach,” Hall said. “You only payfor the services you use, rather than having one fee structuresubsidize everyone.”

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