Survey Finds Big Variance In Bank Fees Consumers Usually Pay More At Large Financial Institutions

Consumers pay nearly $30 a year more on average for checking accounts at big banks than at small ones, and there are similar gaps in other bank charges, a survey finds.

The U.S. Public Interest Research Group, which released the report Thursday, blamed the disparity on the current trend toward consolidation in the nation’s banking industry.

“Merger mania is making the fee-gouging banks even bigger,” contended Ed Mierzwinski, PIRG’s consumer program director. “Fewer and bigger banks means consumers face fewer choices, less competition and even higher fees.”

As a result of rising fees, the consumer group said, more than 12 million American families can’t afford to maintain bank accounts and many others are paying too much.

With bank profits rising strongly, the survey added fuel to already vigorous criticism of bank fees by other consumer groups and smaller banks.

“It’s no big shock to us,” said Robert Forbus, a spokesman for the Independent Bankers Association of America. He said the survey’s finding of a $30 gap for checking accounts was “hand-in-glove” with recent reports by the small banks’ group and government agencies.

But an official of the banking industry’s largest group said the comparison was unfair.

“With more than 40,000 financial institutions competing for customers, today’s consumer is in a ‘buyers’ market’ for bank services,” said Donald Ogilvie, executive vice president of the American Bankers Association. “No bank could overprice its services and remain viable.”

The PIRG survey, Ogilvie maintained, assumed that a typical bank customer bounces checks, deposits bad checks and pays bills late, so that he or she cannot avoid being charged higher fees.

The survey, which covered 419 banks in 29 states and the District of Columbia, found that consumers pay an average $27.94 more to maintain a regular checking account at big banks (average $218.27) than at small ones ($190.33). That compared with a 1995 difference of $17.76 between $211.74 for big banks and $193.98 for small ones.

The average cost of a checking account at a credit union was found to be $108.

The gap between minimum balance requirements at large and small banks widened sharply to $150 from $7 in 1995, the survey found. The average minimum balance, which is required to avoid fees on checking accounts, increased to $642 from $561 in 1995, while at small banks it fell to $492 from $554.

Among the banks surveyed, the lowest-cost states were found to be, in descending order, Montana, Iowa, New Mexico, Vermont and Colorado. Washington ranked sixth lowest.

The institutions surveyed included the Washington State Educators Credit Union, Seafirst Bank, Keybank, Washington Mutual, Wells Fargo and U.S. Bank, which will soon be merged with First Bank System.

Idaho, the second lowest-cost state in a similar study done two years ago, was not included in the latest survey.

In 1993, Washington’s costs were the lowest in the nation.

The highest-cost states were New Jersey, Illinois, Louisiana, Florida and North Carolina. Consumers in New Jersey are able to get low-cost, “no-frills” checking accounts, however.

The PIRG survey also found:

Fees charged by big banks to their own customers for using another bank’s automated teller machine increased 10 percent, to an average $1.19 from $1.08 in 1995. At small banks, they declined 5 percent, to 91 cents from 96 cents.

Of the 419 banks surveyed (which included the 300 largest U.S. banks), 64 offer free checking accounts with no fees and no restrictions other than not providing canceled checks to customers.

, DataTimes