Free checking becoming rarer, according to survey

Updated: October 26, 2012 6:13AM

Consumers who have a free checking account with no monthly fee and no requirement that they direct-deposit their paychecks are in a dwindling minority nationwide, according to a new survey by Bankrate.com.

The survey of fees charged by the top five banks and top five thrifts in 25 large U.S. markets found that only 39 percent of non-interest checking accounts are offered to all customers free of charge.

That’s down from 45 percent last year and 76 percent in 2009.

It’s no surprise that checking account fees are going up, given that two of the big banks’ previously reliable revenue streams have dried up: overdraft fees and debit card swipe fees.

Since 2010, banks have been barred from hitting consumers with multiple, hefty “overdraft protection” fees if they dip into the red, unless the consumer specifically opts in for the service.

And debit card swipe fees charged to merchants by banks have been capped by legislation that took effect a year ago.

The banks are recouping that lost money by hitting consumers elsewhere, said Greg McBride, senior financial analyst with Bankrate.com. “That’s why we’ve see the big decline in free checking.”

Consumers can still usually avoid checking account fees by using direct-deposit for their paycheck or Social Security check. For now, at least, most banks do offer those deals, the survey showed.

Chicago consumers get a little bit of a break in ATM fees compared to the national average. Surcharges for using another bank’s ATM in Chicago are among the lowest in the nation, according to the survey, at an average of $2.25 — the third-lowest behind Minneapolis and Cincinnati. The highest average fee was in Denver, at $2.80, so remember that on your next ski vacation.

Chicago also was lowest in the average fee charged by one’s own bank for using an out-of-network ATM, with an average fee of $1.10. The most expensive city was Philadelphia, at $1.96.

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