Big Banks, Bigger Fees 2001 A National Survey Of Bank Fees November 1, 2001

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News Release

CONTACT:
Ed Mierzwinski or Liz Hitchcock, 202-546-9707

EMBARGOED FOR RELEASE:
Thursday, November 1, 2001 9:30 am

NATIONAL SURVEY SHOWS RISING FEES AT BIG BANKS
Consumers Pay $228 Dollars Per Year In Checking Fees
Federal Reserve Urged To Require Better Fee Notices, Especially On Internet

Consumers could save at least $75 each year by banking at a small bank or credit union instead of a big bank, according to a national report released today by the U.S. Public Interest Research Group (PIRG), the national lobbying office for state PIRGs.

According to the report, the average annual cost of regular checking at the three hundred largest banks was $266, but only $191 at small community banks, and only $101 at credit unions. At the same time, the group found an increase in the number of banks offering free checking accounts, giving consumers the chance to save money if they shop around. The group called on the Federal Reserve Board to improve bank fee disclosures, which it called "appalling," and to require banks to disclose all fees on the Internet.

"When it comes to nickel-and-diming consumers with new fees for this and higher fees for that, big banks are leading the way," said Ed Mierzwinski, Consumer Advocate for U.S. PIRG. "Banks increase fees, they invent new fees, and they make it harder to avoid fees. In the end, consumers pay more and more."

Citing monthly ATM card rental fees as an example, U.S. PIRG charged that many banks are hiding fee increases, by charging a la carte for services that once were standard with checking accounts.

"More and higher bank fees have left at least 12 million American families unable to afford bank accounts," said Mierzwinski. "Unless banks are required by law to offer affordable accounts, most banks will not."

KEY FINDINGS:

• Among 521 banks and 144 credit unions surveyed in 32 states and the District of Columbia, the report found that consumers who fail to meet monthly minimum balance requirements for regular checking accounts would pay annual fees averaging $228 at all banks. Comparing large and small institutions, big bank customers would pay $266 and small banks customers only $191, a difference of $75. Credit union fees averaged $101.
• Nationally, states with both high fees overall and few free checking options included Florida, North Carolina, South Carolina, and New York. States with low fees overall and significant free checking options included Massachusetts, Montana, and Washington State.

ATM CARD RENTAL FEES:

• Nationally, the survey found that 22% of banks are now charging an annual fee for either an ATM card or an ATM debit card. For all banks surveyed, the fee averages $13.28 each year. However, the survey also found that, while 50% of small banks and 93% of credit unions often offer some or all free transactions if they impose an annual ATM fee, only 11% of big banks do.

FREE CHECKING ACCOUNTS

• Nationally, 29% of banks surveyed offered totally free checking, up from 17.5% in 1999. The survey found that 67% of credit unions offer totally free checking.

"We urge consumers to shop around for bank fee deals. Your best bet is usually at a credit union or small bank," said Mierzwinski. "Wherever you bank, look for free checking, or free or low-cost checking with direct deposit or by linking your checking account to another account. Be wary of interest bearing NOW checking accounts, where your fees will offset meager interest payments, unless you keep a very high balance."

U.S. PIRG called on Congress to ban ATM surcharges, require banks to offer low-cost accounts and renew an expired requirement that the Federal Reserve Board continue to study bank fees. U.S. PIRG also sent a letter to the Federal Reserve, asking it to improve fee disclosures and to require banks to disclose fees on the Internet.

"While we urge consumers to shop around, we want to point out that the quality of fee disclosures is appalling," said Mierzwinski. "The situation is especially disappointing because banks could easily disclose all their fees on the Internet, but they do not."

"Get PIRG's "Bank Fees Alert" at our web site, http://www.stopatmfees.com," added Mierzwinski. "In addition to tips on shopping for checking account deals, it will help you fight back against unfair fee increases."

U.S. PIRG serves as the national lobbying office for state Public Interest Research Groups. PIRGs are statewide non-profit, non-partisan public interest advocacy groups active around the country. The report is available at PIRG's bank fee website <http://www.stopatmfees.com> U.S. PIRG's main website is <http://www.uspirg.org>.