Few complain as rising fees boost profits of banks


It may be tame compared with the surge in prices at the gas pump, but many of the costs associated with your checking account continue to rise, researchers say.

If you bounce a check, use another bank's cash machine or let your account balance slip too low, it's likely to cost you more now than six months ago, and much more than five years ago, according to the latest twice-a-year survey by Bankrate Inc., a rate-research firm in North Palm Beach, Fla.

U.S. banking profits have soared almost 67 percent this decade, while fee revenue has increased 44 percent, according to the latest figures from the Federal Deposit Insurance Corp.

Although bank mergers and market growth are responsible for much of those increases, consumers have increasingly shouldered more of the revenue load for banks in recent years, experts said.

"The banks have been able to get away with it because consumers aren't balking or shopping around for a better deal when the fees go up," said John McCune, research director for SNL Financial, a bank research firm in Charlottesville, Va. Linda Carter didn't ignore it. The Kissimmee, Fla., woman ditched her former bank when it charged her $210 in overdraft fees after refusing to credit deposits she had made earlier in the day.

"If there was not enough money there, it would be one thing," she said. "But I had already put in enough money to cover those checks. They just didn't count it. They said it was their policy to deduct the checks being paid first before adding the deposits. I said no, it just can't work that way. So I was out of there."

Bankers say it is actually easier than ever for customers to avoid fees by, among other things, opening and linking multiple accounts, such as savings, checking and credit. And more banks are offering free checking accounts with few opening requirements - in some cases all you need is to arrange the direct, electronic deposit of a paycheck.

Bankrate's spring 2006 survey did, in fact, include several bright spots. The continued spread of free checking, for example, pushed the average monthly fee on a no-interest account to $2.80 a month, down from more than $5 just five years ago.

Also, fewer banks now charge their customers for using someone else's ATM (81 percent versus 89 percent a year ago). And those that do charge such a fee charged less on average for the first time in two years: $1.29 per use versus $1.37 six months ago.

But other data from the Bankrate survey do not bode well for consumers packing checkbooks.

The average balance needed to avoid a monthly service fee on an interest-bearing account rose this spring to $2,465, up more than 7 percent since last fall and 46 percent higher than five years ago.

The average bounced-check fee - $27.04 - is up 0.5 percent from six months ago.

The average ATM fee imposed on a bank's non-customers hit $1.60, up 6 cents from last fall and 18 percent from five years ago.

According to the FDIC, fee income grew at double-digit percentage rates at four of the 10 largest U.S. banks last year. Profits rose at double-digit rates at six of the top 10.

Consumer advocates argue that higher fees for things like bounced checks and ATM withdrawals tend to hurt lower-income and cash-strapped customers more than other account holders.

"The consumer who ends up being really hit by these charges are those who can least afford to be lifting the bank's profit margin," said Jean Ann Fox, director of consumer-protection issues for the Consumer Federation of America.

Bankers dispute the notion that customers generally are saddled with increasingly higher fees and service charges. The American Bankers Association cites a study it did last year that found that 65 percent of all customers spend $3 or less a month on fees, a finding consistent with previous surveys.

Richard Burnett writes for the Orlando (Fla.) Sentinel.

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