NEW YORK (AP) Most people think of bank fees as just a dollar here, a dollar there amounts too small to worry about.
But a study by Bankrate.com, a financial information service, shows how fees charged for checking accounts, automated teller machines, and bounced checks or overdraft protection can add up.
Try this math:
The average service fee for an interest-paying checking account is now $10.73 a month, or $128.76 a year.
A bounced check will cost you a $25.82 bank penalty and the merchant who got the check in the first place is likely to demand a similar fee.
Use an ATM that isn't owned by your bank, and you'll pay an average of $1.49 to the owner of the ATM and $1.45 to your own bank for going outside its system. Do that just once a week, and you'll have paid more than $152 in fees in a year.
Small wonder that fees on deposit accounts now represent more than 17.5 percent of bank income, up from 16.5 percent a year ago, according to the Federal Deposit Insurance Corp.
The Bankrate.com survey, which looked at 350 banks and savings banks in the 35 largest U.S. markets, is the latest in a series dating to October 1998. Full results can be found starting Thursday at www.bankrate.com.
Catherine Pulley, spokeswoman for the American Bankers Association in Washington, D.C., said she believed that lumping fees that consumers pay can be misleading.
In a restaurant, you don't order everything on the menu,'' she said. It's the same with banking, you don't have to pay for what you don't need.''
Pulley also argued that the majority of Americans are smart consumers'' and know how to avoid things like ATM charges and bounced check fees.
Banks come in all different shapes and sizes,'' Pulley said. If consumers shop around, they can find the services that are best for their needs.''
Greg McBride, senior financial analyst at Bankrate.com in North Palm Beach, Fla., said that although many institutions have raised fees, some still offer low- or no-cost alternatives.
Nearly 11 percent of all accounts surveyed don't have any monthly service fees, per item charges or balance requirements,'' he said. They're out there, you just have to look for them.''
Online banks either independent or affiliated with brick-and-mortar banks often have the best deals, he said, but they're not as good as they used to be. For example, just 19 percent of checking accounts at Internet banks are free, down from 46 percent two years ago.
One thing to watch out for is that many banks and thrifts offer free checking if consumers maintain a specified minimum balance, currently averaging nearly $3,000 on interest-paying accounts and $410 on non-interest accounts, according to the Bankrate.com study. In fact, one-quarter of the institutions offering interest-paying accounts require a $5,000 minimum balances, it said.
You have to look at the 'opportunity cost' of tying up that large balance while not receiving adequate compensation in interest rates,'' McBride said. In other words, savers could earn much more on their money in certificates or deposit or other savings instruments than the average 0.47 percent that interest-paying checking accounts currently yield.
Marlys Harris, finance editor at Consumer Reports magazine, said that in many cases, there isn't much you can do but keep your minimum balance above what they demand'' to avoid fees. She noted that some banks will count a lot of things toward that minimum,'' including CDs and retirement account balances.
She said that one strategy to try to reduce the possibility you'll bounce a check is to keep track of your balance on the Internet.
Once a week I go online and check my account and get a real-time balance,'' she said. That's a boon to people like me who can be sloppy about keeping track of every little debit card transaction, every little cash withdrawal.''
Harris suggests consumers who do feel they're paying too much in fees take the time to check out two other banks or ask friends what their charges are.''
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