Region’s banks free with checking lures
But overdraft fees can really bite customers
On the prowl for the right bank? Like a good hunter, it pays to know your surroundings.
Over the past two years, the choices for Pittsburghers looking for free checking accounts have gone up.
On the downside, yields on deposits continue to hover at record lows, forcing consumers to shop elsewhere for a decent return.
Among the region’s top 10 banks, those offering free, no-minimum-balance checking accounts rose to seven — up from six when the Pittsburgh Post-Gazette conducted its last survey two years ago.
Even among the three banks without free checking — PNC, Citizens and KeyBank — customers can snag a free account by clearing a few low-lying hurdles.
Market leader PNC waives the monthly service fee for customers age 62 and older, or for anyone who makes at least $500 in deposits per month.
At KeyBank, at least $500 in monthly deposits also will buy a pass. Alternatively, the Clevelandbased bank — which entered the Pittsburgh market last year by acquiring First Niagara — offers an all-electronic, no-minimum-balance account for people who don’t use paper checks.
To get a free account at Citizens, it’s even easier. Customers need only to remember to make one deposit per statement period in any amount, even as little as a penny.
Among the seven banks with nostrings-attached free checking, most require account holders to get their monthly statements electronically. The exceptions are Huntington and Northwest, which don’t charge a fee for paper statements.
Still, free accounts don’t earn interest.
Customers at Pittsburgh’s leading banks who want a checking account that pays even a small amount of interest will need to keep a balance ranging from $1,000 (at First National Bank) to $25,000 (at Citizens). Falling below the
minimum triggers a monthly fee ranging from $5 to $25.
While earning interest is nice, the yields on checking accounts remain so low they seem barely worth the chase.
The average yield on interest-bearing checking accounts at the top 10 banks is 0.057 percent, up a pinch from 0.046 percent in the newspaper’s last survey two years ago. That means customers with a $5,000 balance would earn about $2.85 in annual interest, up from a similarly paltry $2.30 in 2015.
Customers with bigger balances that qualify for higher rates don’t fare much better.
The average return on the top-yielding deposit accounts at each bank — including checking, savings and money market accounts — is 0.43 percent, up slightly from 0.41 percent two years ago. That works out to about $86 per year in interest on a $20,000 deposit, compared with about $82 in 2015.
The highest rates available locally are offered at Dollar Bank, where customers with “Everything Savings” accounts earn 1 percent on balances up to $20,000 and 0.25 percent thereafter; at KeyBank, where customers with at least $25,000 earn 0.85 percent and at PNC, where customers with $500,000 earn 1 percent on certain accounts.
Those pesky fees
On the fee side, customers who overdraw their accounts can quickly find themselves in a deep hole.
Overdraft fees among the top 10 banks range from $34 to $38.50. In addition to that per-item fee, all of the banks except for Northwest and S&T levy an additional charge when an account remains overdrawn for a certain number of days.
For example, PNC charges $36 per overdraft, plus $7 each day when an account is overdrawn for five or more days, up to a maximum of $98. At FNB, the No. 3 bank in the region, the tab is $37 per item, plus $12 every three business days with no cap.
Huntington is unique in the region for giving customers a 24-hour grace period to get their accounts in the black before assessing any fees.
On the up side, many big banks across the country have stopped processing debit card transactions and checks by reordering them from highest dollar amount to lowest — a procedure that tended to drain a customer’s account the quickest. The practice, decried by consumer groups as a sneaky way to maximize overdraft fees, was curbed several years ago by a number of lawsuits.
Locally, FNB stands out as the only bank among the top 10 that re-sequences both checks and debit card purchases so they clear from highest amount to lowest.
Last week, a spokeswoman said the bank was planning to stop reordering debit card transactions and process them in the order they come in, “similar to our larger competitors,” some time in 2018.
Most of the top 10 institutions here process checks in chronological order and debit card transactions as they are presented, the method favored by consumer advocates. Those banks include PNC, Huntington, S&T, Northwest and Wesbanco. KeyBank and First Commonwealth go a step further, with KeyBank reordering checks from low to high, and First Commonwealth processing debit transactions from low to high.
Citizens and Dollar clear debit transactions in the order they come in, but reorder checks from high to low. The banks contend checks are handled that way because the biggest checks tend to be for customers’ most important bills.
As for automated teller machine fees, they only seem to go one way: Up.
A report released last week by interest rate tracker Bankrate.com found people in the Pittsburgh region are being hit particularly hard when it comes to using machines outside of their home bank’s network.
The average out-of-network fee was $5.19 in this region, the highest among the top 25 metropolitan areas studied. That compares to the nationwide average of $4.69.
The tab includes the fee charged by a customer’s home bank for using another bank’s ATM, plus the surcharge levied by the owner of the machine.
Overall, Bankrate.com said, ATM fees surged 55 percent over the past decade.
Banking officials like to point out that ATM and overdraft charges can be avoided if customers stick to using their home bank’s machines, and monitor their balances closely so they don’t spend more money than what is in their accounts.