How 'Free' Checking Could Cost You $6,847.49

Checking accounts have long been a staple of Americans’ finances, but growing fees are making them more expensive to maintain. The average monthly maintenance fee on a checking account is $13.29, up 20 cents in the last 6 months, according to an analysis from MoneyRates.

Banks often waive maintenance fees if customers keep a minimum balance in their checking accounts, but that’s no easy task. The average minimum balance to get a fee waiver is $6,847.49, an increase of about $800 from six months ago, MoneyRates reported. Not only do many people not have the luxury of having a huge spending cushion in their checking accounts, letting nearly $7,000 sit in a checking account to avoid a $13.29 monthly fee (or $159.48 annually) may not be the best use of that money. Pretty much any other financial instrument will give you a greater return on your money than a checking account, where interest rates are at 0.04% as of March 14, according to the FDIC.

MoneyRates determined its figures by analyzing fees and minimum balance requirements at 100 banks of various size. MoneyRates found that large banks (those with more than $10 billion in deposits) tend to have higher fees than medium and small institutions and almost twice the minimum balance — $11,674.09 — for a maintenance fee waiver.

It’s important to note that many financial institutions do offer alternate ways to have a checking account maintenance fee waived. Some banks, for instance, won’t charge you if you use direct deposit, have a certain amount of money in a savings or investment account with them or use a linked debit card to make a certain amount of purchases.

“There are a variety of conditions banks set under which they will waive fees,” MoneyRates said in an email. “Rather than trying to guess which conditions a given customer could or could not meet, for the purposes of our survey we considered free checking to be only those accounts which were unconditionally free of maintenance charges.”

Overall, only about a quarter of the banks studied offered free checking accounts, and they’re mostly online banks: 53% of online banks don’t have account maintenance fees, while only 22% of branch-based banks can say the same.

Account cost is among many things consumers need to consider whenever choosing a financial product. As far as checking goes, maintenance fees are just one part of that. There are also potential costs like out-of-network ATM fees and overdraft fees. Oftentimes, you can avoid paying such fees by planning ahead and reviewing your account terms and conditions for potential fee waivers. You should also pay close attention to your account balance as part of your regular personal finance routine, which should also include things like reviewing your free annual credit reports and getting a free credit report summary every month on Credit.com.