Even with the wide availability of free checking services, more than a quarter of checking account holders (27%) pay fees every month.
For consumers who don’t take advantage of the free checking account, those fees add up to an average of $24 per month, or $288 per year, according to a new Bankrate.com survey. The personal finance site conducted its online survey from December 7 to 12 and included 3,657 adults, of whom 3,069 have a checking account.
The fees come from routine services or ATM and overdraft fees, the investigation finds. The average overdraft fee is $29.80, according to Bankrate research, while the average non-sufficient funds fee is $26.58.
The annual sums may not sound like much, said Sarah Foster, an analyst at Bankrate.com, but they can add up to $5,000 if you keep your checking account for 17 years, as the average consumer tends to do.
Forgoing bank fees is an easy way to free up a little more money in your budget, especially amid high inflation and recession expectations mounting. Paying those additional costs can weaken consumer budgets and make them more vulnerable if a recession strikes.
“It’s just an important and really easy way to make sure you’re not spending more money than necessary,” Foster said.
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Which generations spend the most on checks?
Younger people are more susceptible to paying fees, according to the Bankrate.com survey.
Generation Z, whose ages range from 18 to 26, tops the list, with 46% of that generation checking account holders paying monthly fees. That cohort pays about $25 per month, Bankrate.com found.
Millennials, who range in age from 27 to 42, are next, with 42% of account holders paying monthly checking fees, Bankrate.com found. They typically pay more compared to other generations, at $28 per month, the study found.
Older cohorts—Generation X, ages 43-58, and baby boomers, ages 59-77—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 per month, respectively.
More than half of Gen Z (56%) and Millennials (52%) account holders say they are sacrificing recession preparation because of the monthly fees they pay. By comparison, 46% of Gen Xers and 35% of baby boomers said the same thing.
The monthly payments are driving consumers back to their goals, including paying off debt, saving for emergencies or for major goals like buying a home or car, paying for college or setting aside money for retirement, the survey found.
Calculate the true cost of your checking account
To know what you’re really paying for your checking account, you need to check your statements at least once a month, according to Bruce McClary, senior vice president of the National Foundation for Credit Counseling.
Start with the basics: Watch your transactions to make sure they’re accurate, he said. Then evaluate your transactions and withdrawals and any account maintenance fees that arise.
If you feel you’re being charged in error, that should prompt a conversation with your bank, McClary said.
Please note that there may be adjustments that your bank or credit union is willing to make. If you tell your financial institution about your personal situation, they may be willing to waive certain fees, particularly a first-time fee, Foster said.
“There’s no guarantee it will work, but it never hurts to communicate,” Foster said.
‘Look for opportunities’
Also consider whether there are fees you can avoid, such as eliminating out-of-network ATM withdrawals or maintaining a minimum balance requirement.
Whenever you can, try to find free checking and savings services, McClary said.
“Look for opportunities,” McClary said. “If your bank or credit union doesn’t offer them, this could be an opportunity to move your business somewhere else where it’s more affordable.”
Opening a new account at another institution can seem arduous, especially if it requires an office visit and physically moving money, Foster said. But the savings over time can more than make up for the inconvenience.
“While changing banks can be quite a hassle, it can help you build wealth in the long run if it means 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, he said.