If adding new banking fees, make sure you’re also adding value
As financial institutions (FIs) are forced to find new revenue streams in the face of ongoing regulation, including the recent “swipe fee” ruling, fees for banking products and services are on the rise. Even so, according to a recent Bankrate.com survey, while banking fees continued to climb this year, they did so at a slower rate.
The report concluded that the average overdraft charge rose just 3 percent in 2013, while the average cost for using another FI’s ATM increased by 2 percent. Although those increases were incremental, they still resulted in both averages hitting record highs this year; with overdraft fees totaling $32.20 and out-of-network ATM fees reaching $4.13.
As Greg McBride, senior financial analyst at Bankrate, sees it, the minimal increases in many checking-related fees indicate that some FIs are winding down “the revenue-recovery strategies they implemented in the wake of the Durbin Amendment.” The survey also found that some FI products became more affordable this year. For example, the average minimum balance to offer a no-interest checking account fell 19 percent to $60.27.
But banks and credit unions must weigh the costs with the benefits when evaluating fee strategies. Seventy percent of consumers consider switching institutions when checking account fees get too high, and those who are most likely to do so often have the highest balances.continue reading »