It's not easy being a banker these days. Low interest rates are dissuading savers. Regulators have tightened not only lending standards, but also the flexibility of financial institutions to collect some fees.
The end result is that banks are trying to make up for lost revenue by hiking the fees that they can adjust until consumers get fed up. Let's go over a few of the fees that are getting out of hand.
ATM fees are getting out of hand
One of the benefits of having a debit card tied to your checking or savings account is access to your money at an ATM. Unlike banks with limited teller hours, these cash-dispensing automatons are available around the clock in high-traffic locations.
The rub is that these automated tellers typically aren't free if you're not at your own bank's ATM. A new Bankrate study finds that the average surcharge charge to non-customers has inched higher for 10 consecutive years. The latest average is 6.5% higher to $2.77 per transaction.
That's just part of the equation. Banks take a hit when a customer uses someone else's ATM so they also take a bite on these out-of-network transactions. The average fee rose to an all-time high of $1.58. Combine both fees and we're taking about an average of $4.35 whenever someone strays away from the ATMs located outside one of their bank's local branches.
Overdraft fees are getting out of hand
As consumers we sometimes write checks or swipe debit cards when we don't have enough money to cover the transaction. Whether it's wishful thinking or ignorance, there's usually a price to pay for attempting to go sub-zero.
Overdraft fees -- or penalties for insufficient funds -- are also on the rise. Bankrate's survey of consumer banks found that the average overdraft charge is now $32.74, up 1.7% over the past year. It's a big hit, especially since it hits clients that can least afford to pay it. These are customers that are on hard times or perhaps just entered the realm of banking after getting hosed by the sky-high interest rates charged by payday lenders.
Things changed four years ago with Dodd-Frank. The 2010 Federal Reserve rule now requires banks to have customers opt in for overdraft protection. However, that has also made banks even hungrier for higher fee revenue in an era where fewer customers are opting in for overdraft coverage.
Interest checking minimums are getting out of hand
Another item on the rise is the average account balance required on interest-bearing checking accounts to avoid monthly charges. Bankrate's survey finds that the average balance has increased 7% over the past year to $6,211. The monthly fees charged when investors can't get their balances over that chin-up bar has inched 0.8% higher to a new high of $14.76.
With interest checking accounts yielding an average of 0.4% the easy solution would be to turn to non-interest checking accounts that usually have lower balance requirements and monthly ransoms for when they are not met. If the difference between the two is money that you can work harder for through higher yields elsewhere, non-interest checking could be the way to go.
These aren't the only ways that banks nickel and dime you, of course. Go in for a wire transfer or to have a cashier's check done and even your own institution will typically charge you for it. Issuing a stop payment on a check or having to replace your lost debit card are just some of the many ways that your bank can make up for lost revenue elsewhere.
Some of the fees are reasonable and fair, but it's up to you to determine how much is too much. Moving away from the megabanks can help. Credit unions or smaller, hungrier banks may offer more compelling fee structures. The Internet could also be your friend with BankOfInternet, Ally, and other FDIC-insured branch-less institutions that pass on the savings of not having to maintain a network of physical branches to clients in the forms of lower fees and better rates. Bank fees aren't going away. You just need to get better at skirting the outrageous charges.