Financial Update (Third Quarter 2003)


   International ACH

   FedImage Services

   Guynn’s Speech


   Bank Fees and

   Challenge of Low
   Interest Rates

   Emotion and
   Financial Markets


   Spanish Brochures

   Economic Forecasts


   Did You Know?

   Data Bank

   Circular Letters




Annual Fed Report Tracks Bank Fees and Services

Each year the Federal Reserve Board of Governors prepares a report on changes in the cost and availability of certain retail banking services. The 2003 Annual Report to Congress on Retail Fees and Services of Depository Institutions, based on surveys conducted in June 2001 and June 2002, finds a slight trend toward less service availability and some evidence of rising fees. The results also show that multistate organizations generally charge higher fees than do single-state organizations.

Availability changes
Of the 24 measures that may be considered indicators of service ability (factors like the number of banks that offer a particular kind of checking or savings account), six changed a statistically significant amount, and five of these measures moved in the direction of less service ability. For example, in 2001, roughly 50 percent of banks and savings associations offered a single-fee, interest-paying account (that is, the institution charges no fee if the account holder maintains a minimum balance; otherwise, the institution charges one monthly fee with no check charge). In 2002, that proportion was down significantly to 40 percent.

In general, the survey found that fees charged by multistate banks were higher than fees charged by single-state banks.

Fee changes
Telephone surveys collected two types of data about fees: the level (the average amount charged by those institutions that charge the fee) and the incidence (the percentage of institutions charging the fee). Over the period between the two surveys, the level of fees increased significantly in six of 17 categories and decreased significantly in two cases. The incidence of fees increased significantly in one case and decreased significantly in two. (The categories surveyed include fees such as per-check charges, monthly fees and the average minimum balance required to open an account.)

One example of significant changes can be seen in the average monthly fee associated with fee-only checking accounts (noninterest accounts in which the customer incurs a monthly fee regardless of the account balance). The fee increased from about $4.75 in 2001 to about $5.25 in 2002, but the proportion of institutions levelling a per-check charge for this type of account declined significantly, from 60 percent in 2001 to about 25 percent in 2002. The per-check charge also declined significantly, from 34 cents in 2001 to 22 cents in 2002.

Single-state vs. multistate organizations
In general, the survey found that fees charged by multistate banks were higher than fees charged by single-state banks. Of the 14 fees compared, multistate banks charged significantly higher fees in eight cases. For example, multistate banks on average charged $3.52 more than did single-state banks for stop-payment orders, about $3.14 more for NSF (nonsufficient funds) checks, and $3.87 more for overdrafts.

The complete survey results and the survey methodology can be found in the online report.

Cover | Next