Don't Throw Away $169 a Year

Sept. 28, 2007 — -- If you paid $2 or more for an ATM withdrawal or bounced a check and got hit with a hefty fee, you're not alone.

Across the country bank fees continue to creep up, hitting new all-time highs in several areas, according to a survey by Bankrate.

Want to use an ATM that doesn't belong to your bank? It will cost you an average of $1.78, up 14 cents from last year.

The $2 fee is now the most prevalent, but the fee stretches higher, with 22 of the 249 banks surveyed by Bankrate charging more than that. This is up from just four banks last year.

Bank of America recently announced that it was raising ATM fees to $3 for noncustomers -- that's an increase of $1 more every time you want some cash.

While only a dollar or two at a time, these fees add up quickly.

Make one withdrawal per week from another bank's ATM paying a $2 surcharge and $1.25 fee to your own bank and you'll pay a total of $169 over one year.

It Pays to Shop

Bankrate estimates -- using General Accounting Office data on the number of ATMs and nonaccountholder transaction volume -- that consumers will pay nearly $4.4 billion in ATM fees in 2007.

But it's not just ATM fees that are climbing.

Bounced check fees rose to an average of $28.32, up from $27.40, while monthly service fees on interest-bearing checking accounts climbed from to $11.72 from $10.74.

When shopping around for a bank, customers need to ask themselves: "What is my financial lifestyle?" said Greg McBride, senior financial analyst with Bankrate.

If you get cash a lot, you probably want a bank with more branches and ATMs near you, McBride said. But you if travel frequently and are doing the bulk of your banking from a laptop in a hotel room, look for a bank with strong online banking features.

McBride points out that some online banks are offering checking accounts with "pretty attractive yields."

If you're worried about bounced-check fees, it pays to get overdraft protection. But, McBride said, "If you're shopping on the basis of bounced check fees, that signifies a greater problem."

Go the Freeway

Even if you don't write checks, fees may still await you. McBride notes that consumers need to watch their debit card purchases closely because those withdrawals are treated just like a check and can lead to bounced check charges.

While monthly maintenance fees for accounts have also increased, there are numerous ways to avoid them. Bankrate says it takes an average of nearly $1,000 to open a checking account and earn interest. The average balance to avoid fees is more than $3,300.

But the interest rate is so puny on these accounts that they are often not worth the trouble, McBride said.

Instead, consider checking accounts that don't earn interest. About 68 percent of those have no monthly service fee or balance requirement.

Additionally, some online banks are offering free checking accounts with yields as high as 5 percent.

There is some bright news in the report: The fees your own bank charges you to use an out-of-network ATM have held steady at $1.25.

In fact, the trend in the past couple years has been to enhance customer satisfaction by providing free or lower-cost access to nonbank ATMs.

Some online and offline banks even go one step further, reimbursing customers for the ATM fees other banks charge.

"That customer has even greater freedom than the customer of their largest competitor because now that customer can go to any ATM they want and it's not going to cost them," McBride said. "Those policies are pretty few and far between, and the string that is often attached is that you have to maintain a significant balance."

"Banks that don't have that big of an ATM network don't want to lose their customers to their competitors," he added, "but in particular they don't want to lose the customers that have higher net worth, have deeper pockets and likely more relationships with the bank."