NEW YORK–The poorest Americans are paying the most when it comes to bank fees, according to a new analysis.
The new analysis also identifies credit unions as the “best option” for consumers, although the sample size was small.
Americans with annual household income under $30,000 and a checking account pay an average of $31 per month in bank or credit union fees, according to a survey commissioned by Bankrate.com and MONEY.
That’s more than three times as much as the $9 typically paid by other income brackets (these figures include routine service charges, ATM fees and overdraft fees), Bankrate.com reported. Just 59% of U.S. adults with household income under $30,000 per year even have a checking account (compared with 83% of all others).
Bankrate.com recently reported that the average out-of-network ATM withdrawal costs $4.69 and the average overdraft fee is $33.38.
“Just 38% of banks offer free checking accounts to all customers,” Bankrate.com said. “The rest typically charge a monthly fee (often $12) which can be waived if certain conditions are met. But these stipulations can be problematic for low-income households (the most common are direct deposit and keeping at least $1,500 in the account).”
While 63% of checking accountholders avoid bank fees, one-third of those who pay fees are charged at least $26 per month, and they’re disproportionately from households with lower income and education levels, Bankrate.com said. “A CFPB study found 9% of accountholders overdraft 10+ times per year; they shoulder 79% of banks’ total non-sufficient funds fees,” the company added.
Bankrate.com said the average checking accountholder has been using that same account for about 16 years, with members of the Silent Generation having held onto their accounts for the longest (30 years, on average), and with Baby Boomers not too far behind (21 years). Older Millennials (27-36-year-olds) have been using the same checking account for an average of approximately 8.5 years.
A survey of consumers conducted by Bankrate.com found just 12% say they choose or stick with a bank because it has low or no monthly fees, despite the toll those charges can take.
A majority of checking account holders (63%) say they manage to avoid paying any fees. But the rest spend anywhere from $1 to more than $50 per month on ATM and overdraft fees and routine service charges.
Millennials are the age group most likely to pay checking fees — 28% do — and they say they pay a steep $26.60 a month, on average, according to Bankrate.com.
To help consumers find the best options, Bankrate.com and MONEY teamed up on a series of Best Banks lists. The winners are:
Best Online Bank: Bank of Internet
Best Credit Union: Alliant Credit Union
Best Big Bank: Capital One
Best Regional Bank: Banner Bank
“The survey found the most popular reason for choosing a bank or credit union in the first place is convenient branch or ATM locations,” Bankrate.com said. “The most common reason to stick with a financial institution is its customer service.”
Bankrate.com said it based its analysis on checking and savings account data from 75 brick-and-mortar banks, 50 credit unions and 15 online banks. That included more than 800 accounts and 18,000 data points. Criteria included monthly service fees, interest rates, ATM/branch access, ATM fees, minimum deposit/balance requirements and mobile app ratings.