NEW YORK–At the same time some financial institutions, including credit unions, are announcing they are eliminating overdraft fees, a new survey finds the fees (NSFs) have hit a new record high in 2021 $33.58, up slightly from $33.47 last year.
The findings were released as part of Bankrate.com’s annual Checking Account and ATM Fee Study. The study further found that for interest checking accounts, the average balance to avoid the monthly fee soared 31% from last year’s record high of $7,550.42 to a new record of $9,896.81 while average yields fell to a new record low (0.03%).
The study has surveyed non-interest and interest accounts and their associated fees for over 20 years, Bankrate.com reported.
Overdraft (NSF) Fees
According to Bankrate.com, the increase in average fee to $33.58 marks the third year in a row the cost has increased over the prior year. The most common fee, for the 13th year in a row, remains $35, and the range of fees is the same as in 2019 and 2020, the company said.
“However, these fees are trending up, with increasing overdraft fees outnumbering decreasing fees by a 7-to-1 margin,” Bankrate.com reported.
Overdraft fees also vary by metro area, with Philadelphia having the highest average overdraft fee ($35.70), while Cincinnati’s fees are the lowest ($30.42).
Interest and Non-Interest Checking Accounts
For interest checking accounts, the average monthly service fee is up to a record high of $16.35, up from 5.5% from last year’s record of $15.50. The average balance required to avoid the monthly fee soared 31% from last year’s record high of $7,550.42 to a new record of $9,896.81, the Bankrate.com survey found.
According to the survey, 79% of interest checking accounts require some form of balance requirement, either in the checking account or across multiple accounts, to avoid the fee.
“Only 12% of interest checking accounts will waive the fee based solely on direct deposit, down sharply from 21% last year. Further, less than 8% of interest checking accounts are free without stipulation, and regarding that interest, the average yield fell to a new record low of 0.03%, down from 0.04% last year,” the analysis found. “By contrast, non-interest checking accounts have the highest percentage of free accounts, meaning they do not have a monthly fee or balance requirement, since 2010 at 48%, marking the 6th consecutive year the percentage of free accounts has increased.”
For non-interest accounts, the average monthly fee is $5.08, down 3.6% from $5.27 last year, and the lowest since 2011. The average balance requirement to avoid fees is at a 10-year low of $506.62, down 15% from $593.52 last year, according to Bankrate.com.
Additional Findings
“In addition to the high percentage of free accounts, 50% of accounts will waive the monthly fee with direct deposit, account balance, transaction activity, or some combination thereof,” Bankrate.com said. “Ninety-nine percent of non-interest accounts are free or can become free, with 41% of accounts waiving the monthly fee solely based on direct deposit, making it the predominant fee waiver. Eighty-nine percent of non-interest accounts are either free, or can become free by having a regular direct deposit into the account.
Methodology
The survey group consisted of 245 banks and thrifts in 25 large U.S. markets. A total of 236 interest and 236 non-interest checking accounts as well as their associated ATM and debit card fee policies were included in the survey, which was conducted July 19 to Aug. 9, 2021.