Even with the widespread availability of free checking services, more than a quarter of current account holders — 27% — pay fees every month.
For consumers who don’t take advantage of free checking, those fees average $24 a month, or $288 a year, according to a new Bankrate.com survey. The personal finance site conducted its online survey from Dec. 7-12 and surveyed 3,657 adults, 3,069 of whom have a checking account.
The fees come from routine services or ATM and overdraft fees, the research found. The average overdraft fee costs $29.80, Bankrate research found, while the average underfunding fee is $26.58.
The annual amounts may not sound like much, said Bankrate.com analyst Sarah Foster, but they can add up to a whopping $5,000 if you stick with your checking account for 17 years, as the average consumer typically does.
Waiver of bank fees is an easy way to free up a little more cash in your budget, especially amid high inflation and rising recession expectations. Paying these extra costs can strain consumers’ budgets and make them more vulnerable if a downturn occurs.
“It’s just an important and really simple way to make sure you’re not spending more money than you have to,” Foster said.
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Which Generations Spend the Most on Fee Checks
Younger people are the most susceptible to paying fees, according to Bankrate.com research.
Gen Z, which ranges from 18 to 26 years old, tops the list, with 46% of current account holders of that generation paying monthly fees. That group pays about $25 a month, Bankrate.com found.
Millennials, ages 27 to 42, are next, with 42% of account holders paying monthly fees, Bankrate.com found. They tend to pay the most compared to other generations, at $28 a month, the survey found.
Older cohorts — Gen Xers, who are between 43 and 58, and Baby Boomers, aged 59 to 77 — are less likely to pay checking account fees. That includes just 22% of Gen Xers and 14% of Baby Boomer checking account holders, who pay $17 and $22 a month.
More than half of Gen Z account holders – 56% – and millennials – 52% – say they are sacrificing recession-readiness because of the monthly fees they pay. By comparison, 46% of Gen Xers and 35% of Baby Boomers said the same.
Monthly fees put consumers back on track with goals, including paying off debt, saving for emergencies or for big goals like buying a house or car or paying for college, or setting aside money for retirement, the study found.
Measure the true cost of your checking account
To know what you’re really paying for your checking account, you should monitor your statements at least once a month, says Bruce McClary, senior vice president of the National Foundation for Credit Counseling.
Start with the basics — looking at your transactions to make sure they’re accurate, he said. Then estimate your transactions and withdrawals and any account maintenance fees that occur.
If you think you’re being charged in error, that should prompt a conversation with your bank, McCleary said.
Keep in mind that your bank or credit union may be willing to make adjustments. If you let your financial institution know about your personal situation, they may be willing to waive certain fees, especially first-time charges, Foster said.
“There’s no guarantee it will work, but it just never hurts to reach out,” Foster said.
‘Shop around the possibilities’
Also assess whether there are any fees you can avoid, such as by eliminating out-of-network ATM withdrawals or maintaining a minimum balance requirement.
Where you can, try to find free savings and checking services, McCleary said.
“Shop around the possibilities,” McCleary said. “If your bank or credit union doesn’t offer them, this could be an opportunity to move your business elsewhere where it might be more affordable.”
Opening a new account at another institution can seem overwhelming, especially if it requires an office visit and physical movement of cash, Foster said. But the savings over time can more than make up for the hassle.
“While switching banks can be quite a tedious step, it can help you build wealth in the long run if it means you’re not paying for a service you can get for free elsewhere,” Foster said.
And if you find you’re not happy with your new account, you can always move your money elsewhere, she said.