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Bounced check: $32. Stop-payment: $30. ATM charge: as high as $3.
Even now, after all those bailouts, banks never seem to tire of dipping a little deeper into your wallet. Despite the tough economic times and increased scrutiny from Washington, they are keeping most fees at record highs, and some are eking out slight increases on others such as overdraft charges – a step they rarely took during past recessions.
The result? Americans are paying more to save and spend their money.
And while the increases are still relatively small by historical standards, they illustrate how banks are looking for almost any nugget of income to help offset huge loan losses and lower revenue as consumers buckle down on spending.
The nation's biggest banks – those that got the biggest bailouts from taxpayers, and are now emerging to dominate the industry – charge fees that are on average at least 20 percent higher than those at smaller lenders, according to Moebs Services, an economic research firm used by banks and federal regulators.
Some of the charges are getting more creative. Several big banks – including JPMorgan Chase, US Bancorp and Wells Fargo – recently began billing some small-business customers for federal deposit insurance increases. Citigroup and PNC Financial assess an international transaction fee of around 3 percent when customers swipe their debit cards overseas.
Bank of America recently introduced a raft of changes. In June, it raised the fees on its basic monthly checking account to $8.95 from $5.95. In April, the bank considered raising its overdraft charge to $39, nearly double what the typical bank charged a decade ago. It only backed down after consumers erupted, tweaking its rules to keep its initial fee at $35.
And then there are credit cards: Banks are scrambling to raise rates and fees before a credit card reform bill that President Obama signed into law last month takes effect. JPMorgan Chase recently announced it will raise some balance transfer fees to 5 percent from 3 percent in August. Citigroup, Bank of America and other lenders have also been hiking the interest rates for millions of cardholders.
Overall, fees at the biggest banks are running at their highest levels on record. The average ATM charge, which generates billions of dollars for banks annually, rose at the end of 2008 to $1.97, up from $1.78 the year before and nearly double the 89 cent average recorded in 1998, according to Bankrate.com. Other charges are more eye-popping: Today's typical $30 stop-payment fee is about twice as much as that of a decade ago, according to Moebs.
But the most unexpected change has occurred in overdraft fees – the industry's most lucrative and controversial charge – which rose to an average of $26 after four years at $25.
That is only a modest 4 percent increase, compared with the double-digit overdraft fee hikes a few years ago, when charges rose to $25 from $22. But amid intense scrutiny from regulators and lawmakers, consumer advocates – and even some bankers – are surprised.
“We've never seen a price increase during a recession,” said Michael Moebs, the chief economist and founder of the research firm that analyzed the fee data at more than 2,200 lenders. “What the bankers are saying is that ‘I want to maintain my revenue.'”
Scott E. Talbott, a lobbyist for the Financial Services Roundtable, said the banks' fees reflect the cost of providing those services, and the rise in overdraft charges reflects increased risk. “There is an increased riskiness around repayment because of the recession,” he added.
Most banks have been reluctant to raise overdraft fees or have made subtle, but potentially lucrative, changes to how they are assessed. Bankers are worried about a backlash from Washington and would rather find ways to boost profits under the radar. For instance, many banks already generate rich profits by charging consumers high interest rates for loans, while keeping interest rates paid on money market and checking accounts low – a trend that has become more acute as the Federal Reserve keeps rates near zero to help stoke an economic recovery.
