NEW YORK–A new analysis has found 27% of Americans are paying monthly fees, costs that include routine service charges to ATM and overdraft fees, with nearly half saying the fees are hurting them in preparing for a recession.
“That’s despite many banks on the market not charging for those services.
Those costs can add up,” according to Bankrate, which conducted the study.
On average, Bankrate reported fee-paying checking account holders chalk up $24 a month, or $288 per year, the poll found. Nearly half (48%) say those checking account fees are preventing them from preparing for a recession — limiting how much they can save for emergencies and pay down debt, Bankrate stated.
“Avoiding unnecessary fees is part of the recipe for financial success. Over the coming two decades, assuming the annual rate and level of savings doesn’t change — which it will — one would have another $5,760 to work with,” said Mark Hamrick, Bankrate senior economic analyst.
Key Takeaways
According to Bankrate, other key takeaways from the study include:
- Americans said they would pay down debt (30%), add to their emergency fund (29%), fund discretionary purchases (27%) or save for a major financial goal (26%) if they didn’t have to pay monthly checking fees
- 31% of checking account holders who pay monthly fees say the reason they’ve remained with their financial institution is unrelated to the products or services it provides
- 37% of Americans with a checking account (37%) say low or no monthly fees are the most important feature in a bank
- 73% of Americans with a checking account said they are taking advantage of no-fee banks and paying nothing in monthly fees. “But those costs are causing the 27% who do — reflecting 57 million adults — to sideline major financial milestones and forgo prudent steps with their money,” according to Bankrate.
- Men are slightly more likely than women to pay fees on a checking account, at 31% versus 23%. Yet, men and women who pay fees spend the same amount of money each month ($24), Bankrate reported
- Individuals earning $100,000 or more who pay bank fees spend the most each month ($31 on average), while those earning between $80,000 and $99,999 pay an average of $29. That compares with $20 for Americans making between $50,000 and $79,999, along with $24 for those who make less than $50,000
Why Not Change?
Why are Americans sticking with a fee-charging checking account? According to the Bankrate survey, 31% say it’s unrelated to its products or services.
Among the findings related to that question:
- 16% said it is the account they’ve always had
- 11% said it would be too much of a hassle to switch banks
- 4% said they don’t have time to shop around or research other options
- 8% said the reason why they’re sticking with their fee-charging bank is because they pay low monthly fees
Additional information can be found here.
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