More than one in four checking account holders, or approximately 57 million adults, are still paying fees. The fees hinder several Americans from saving or even paying down their debt. Inflation is three times higher than the pre-pandemic average despite easing again in December last year. Americans may have difficulty surviving the high inflation or a potential recession.
According to the Bankrate report, the average overdraft fee for a checking account is $29.80, and an average monthly fee of $16.19 for an interest checking account. Nearly half of the non-interest checking accounts are free, with an average monthly fee of $5.44, which is an increase of 7% compared to last year. The average cost of an out-of-network ATM withdrawal is $4.66, which is a three-year high.
Almost half of Americans (48%) say they are “sacrificing their level of recession readiness” by paying these bank fees. These monthly dues keep them from being able to pay their debt or add to their emergency savings. Moreover, it hinders their ability to accumulate wealth and opportunity.
Bankrate notes that 46% of non-interest checking accounts are free but have their requirements, such as a set minimum balance and a direct paycheck deposit.
Despite the additional burden of monthly fees, about 16% of Americans have no plan to switch to another bank or method of savings as it is the account they always had and to avoid the hassle during processing.
Fed officials have hinted at their intention to increase the key rate to 5%. The agency aims to slow spending, cool the economy, and alleviate inflation. However, this also entails a higher mortgage rate, costs of auto loans, and business borrowing.
Sarah Foster, a Bankrate analyst, recommends the consumer “free up any amount of cash you can recycle back into an emergency fund.” This strategy includes switching to a no-fee bank and reducing the checking fees.