Study: Free checking accounts are still widely available
Free checking is alive and well at small banks and credit unions.
A recent survey by the U.S. Public Interest Research Group found that free checking accounts are available at more than 60% of small banks and credit unions.
The consumer advocacy group surveyed 250 banks and 116 credit unions in 17 states and the District of Columbia to compare fees.
While nearly two-thirds of small banks offer free accounts, just 24% of the biggest banks — those with more than $10 billion in deposits — offer fee-free accounts, the report Big Banks, Bigger Fees found.
Some 59% offer free checking when paired with regular direct deposits.
"Consumers should reject the myth that the days of free checking are gone," Ed Mierzwinski, the group's consumer program director, said in a news release. "Consider moving your money to a small bank or credit union to avoid those big fees at the big banks."
Our step-by-step guide will tell you what you should look for in your next checking account.
The PIRG survey found small banks often have lower monthly fees, overdraft fees, fees for using other banks' ATMs and balance requirements than big banks.
But the report recommends consumers use credit unions, which are a lower-cost alternative to banks and offer the same variety of service.
Bank Study Key Findings
|48%||Percentage of banks that provided researchers account fee information on first request, as required by law.|
|12%||Percentage of banks that refused to provide fee information after multiple requests.|
|63%||Percentage of small banks that offer totally free checking.|
|60%||Percentage of small credit unions that offer totally free checking.|
|59%||Percentage of big banks that offer free checking with a regular direct deposit.||Source: U.S. Public Interest Research Group|
It also recommends consumers shop around and examine any fees they currently pay.
Unfortunately, those fee schedules aren't easy to find.
PIRG said not even half of banks it visited provided fee schedules to its researchers, which is required by law, on the first request.
Only 72% complied with the law after two or more requests, and 12% simply refused to provide information, claiming they didn't have it or telling the researchers to "go online."
When it comes to finding fees online, 62% of big banks and only 29% of small banks provide fee information, according to the report.
In addition, "finding the fees was often a scavenger hunt," the study notes.
"The Truth in Savings Act is a simple law that helps consumers shop around," Mierzwinski said. "But compliance with it is poor, harming consumers who cannot learn the truth."
The PIRG report calls for the Consumer Financial Protection Bureau to enforce the Truth in Savings Act, which requires banks and credit unions to disclose all account-related fees. PIRG wants all institutions to post fees on the web in a searchable format.