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Friday, Oct. 24, 2014

Bank fees rising, local bankers say not necessarily so

Friday, May 5, 2006

SIKESTON -- A national study of bank fees says the cost of overdrawing your checking account has gone up again, but some local bankers say that's not necessarily the area's trend.

Robin Hough of First State Bank in Sikeston said the institution hasn't increased its fees in two or three years. The current fee for bounced checks by First State customers is $20 per check, and the fee is $1.50 for its customers who use a foreign automated teller machines -- machines not owned by the bank.

"We review the fees annually, and they are subject to change," Hough said.

Bankrate.com said in a survey released last month of banks and thrifts in the nation's 25 largest markets found that the average fee for a bounced check rose to $27.04 this spring from $26.90 last fall.

That's the second highest on record, behind the average $27.13 a year ago, according to Bankrate.com, an online financial information service based in North Palm Beach, Fla.

The survey involving 248 institutions also found that surcharges have risen on ATMs, to $1.60 this spring from $1.54 last fall. Two years ago, ATM surcharges -- which are imposed when consumers use ATMs that aren't owned by their own bank -- averaged $1.32, Bankrate.com said.

Bankrate.com said that the ''one bright spot'' was that banks have reduced the amount they charge their customers who use ''alien'' machines. These fees dropped to $1.29 from $1.37.

Hough said the bank tries to keep fees down.

"We do our own survey on what other banks and the surrounding communities in a 50-mile radius do and then review that," Hough said. "There are a lot of banks in Sikeston, and it's very competitive."

Anna Ferrell, marketing director at First Security Bank, which has locations in Sikeston and Charleston, said the institution's bounced check fee increased last year.

"A lot of that was due to the regulation of the fee," Ferrell said. "Our fee is $25 whether the check is paid or returned."

When a check bounces, extra back office work goes into the process as well as the bank paying the check, which creates more expense for the bank, Ferrell said.

A $1 fee is imposed to customers who use foreign ATMs, Ferrell said. Greg McBride, senior financial analyst for Bankrate.com, said that although fees are higher, there are ways consumers can work around them.

McBride said that a growing number of banks use a tiered structure for overdraft fees, charging about $25 for a single bounced check but increasing its fee to $30 for subsequent overdrafts.

''If you bounce a check every three months, that's more than $100 a year'' in fees, McBride said. ''Instead, sign up for overdraft protection -- ideally one that links your checking account to your savings account.''

Overdraft protection does help.

"If you make a mistake -- and a lot of people do -- they know it would be covered and wouldn't be sent back," Hough said.

Besides simply not writing checks when the funds aren't there, customers can search around for locations of their bank's own ATMs, Ferrell said. And some institutions offer free foreign ATM transactions.

"They can make a purchase at a store and ask for cash back. As far as I know, no businesses in town charge customers for that service," Ferrell said.

Be smart and search around for institutes that offers the lowest fees, Ferrell said, adding no bank has free overdraft privileges.

If an institution changes fees, they must give customers a 30-day notice, Ferrell said. And most banks make fee changes on an annual basis.

"For our customers, planning ahead and stopping here or one of our ATM locations will help avoid fees," Hough said.

Bankrate.com estimated that consumers probably will pay some $4.2 billion in ATM service charges this year.

Fees have been rising in recent years because financial institutions have found them to be a more-predictable form of income than interest charges, which can rise and fall as market conditions change.

As a result, financial institutions have become more dependent on such fees to generate profits.

"It can be a very profitable," Ferrell agreed.

The survey also compared minimum deposits and average yields on checking accounts at online banks and brick-and-mortar banks:

-- Minimum to open and interest-bearing account: $605 at Internet banks, $429 at traditional banks.

-- Average Yield: 1.96 percent at Internet banks, 0.32 percent at traditional banks.

-- Minimum balance to avoid fees: $1,250 at Internet banks, $2,465 at traditional banks.

-- Monthly service fee: $5.50 at Internet banks, $10.85 at traditional banks.

The Associated Press contributed to this report.