Study Finds Out-Of-State Banks Charge Higher Fees Report Contradicts Assertion That Fees Have Shot Up In Last Two Years

Fees charged by out-of-state banks are significantly higher than those at in-state banks, the Federal Reserve said Tuesday.

But in a report based on a 1994 survey of more than 1,000 banks and savings institutions, the Fed said average fees did not rise very much from 1993.

“Almost no cases of statistically significant nationwide increases in the level of fees have been found in the 1993-94 period for either banks or savings associations,” the report said.

Last month, a consumer group said many checking and savings account fees rose in the past two years by 11 percent, twice the rate of inflation. The study by the U.S. Public Interest Research Group compared fees of 271 banks in 25 states and the District of Columbia with a similar study of 23 states the consumer group performed in 1993.

The Federal Reserve said its study showed that about as many banks increased fees as cut them in 1994.

But it said there were many cases in which services at banks were reduced in 1994. The opposite trend was found at savings associations.

At a time when interstate banking is on the rise, the Fed said it found significant evidence that in-state banks offered lower fees.

For example, the study said, stop-payment orders and overdrafts average about $2 more for out-of-state banks. Also, money orders at out-of-state banks averaged about 58 cents more for account holders and about $1 more for those without an account.

An out-of-state bank was defined as one having its headquarters in a state other than the one where the surveyed bank was located, or a case in which a bank was owned by a holding company located out of state.

The Fed said that in some cases out-of-state banks require lower minimum balances to open some types of accounts and are more likely to offer free checking.

The report said in cases where higher fees are charged by out-of-state banks, there may be a correlation with the size of the banks.

Out-of-state banks usually are larger than in-state banks and may be concentrated in large cities where costs are higher, the study said.