There's much to check in choosing an account

10/21/2001

Banks and thrifts in the Toledo area offer a bewildering array of personal checking accounts - dozens in all, and as many as 10 packages at some institutions.

Many of the accounts are tied into other banking activity, such as investments, savings, and even consumer loans and mortgages.

Compounding the problem for consumers comparison shopping is that institutions are pushing relatively new “free” checking accounts - free, but with strings attached - and new types of checking accounts aimed at people attuned to computers and automated teller machines.

Fees, restrictions, and minimum balance requirements sometimes vary significantly between checking-account packages, so to get the best deal shoppers need to understand their financial habits and needs. Plus, bankers emphasize, it's important to read the fine print carefully: It's getting very expensive to bounce a check, to stop payment, to get help balancing a checkbook, or even to lose an ATM card.

“What it comes down to is, you have to look at what you historically keep in your [checking] balance and what your lifestyle is,” said Mike Farrell, senior vice president at Fifth Third Bank (Northwestern Ohio). “The best deal depends on the person.”

A customer typically keeping less than $1,000 in a checking account would not gain by using interest-bearing checking accounts because monthly charges would more than offset any interest earned, he said. Such a customer would be better off in a non-interest-bearing no-frills account or even one that charges a nominal monthly fee for bare-bones checking.

Price should not be the sole factor in determining the value of a checking account, said Paul Meinerding, district team leader in charge of KeyBank's Toledo area and Michigan retail banking.

“You have to look at convenience,” he said. “If it's cheaper but you have to drive 15 to 20 miles across town [to bank], then why get it?”

New checking-account offers are driven by customer needs, such as quicker and anytime service through an ATM or Internet banking, he said.

One new product that could go national was tested this year in Toledo by Charter One Bank. “If a customer tends to overdraw an account, Ready Cash will save them money,” said Caroline Horvath, senior project assistant in Toledo. The program is aimed at retaining customers who otherwise might be discouraged by high check-bouncing fees.

Normally, Charter One charges $28.50 for each overdraft. The average bounced-check fee among 10 banks in northwest Ohio and southeast Michigan is about $27, up 50 percent since 1993. But in the Ready Cash accounts, the charge is $12 if the overdraft is covered right away. However, an additional $25 charge is imposed if a check remains overdrawn for eight days, and $7 a day is charged if the check remains overdrawn after 16 days.

In a random sampling of downtown Toledo bank customers one day last week, about half knew exactly which account they have and had at least a notion of monthly charges. Among those who didn't know for sure was Angela Hurst, a payroll worker at Manor Care, Inc. “It's whatever they gave me as a student,” said Ms. Hurst, who prefers a debit card over paper checks.

Matt Schroder, a public relations account executive, knows his monthly cost is zero. Because of direct deposit, his account always carries enough of a balance that fees are waived. After walking several blocks on a chilly day to do his banking, he said, “There has to be an easier way.” He added that he might consider switching to a new electronic-based checking account.

Several banks offer Internet banking, typically with more perks than traditional accounts. Fifth Third's new e53 account is free and earns interest. The catch is that customers must download their statements from the Internet, and they get no paper checks back. National City Bank's Self-Serve Checking charges $3 a month but levies a $3 charge for teller transactions that could be done at an ATM. Sky Bank's Access Checking charges nothing for the first four checks ($1.50 each after that) but also charges $1.50 for each over-the-counter deposit.

Most banks offer “free” checking, which typically provides a statement of activity but not the canceled checks or images except for a fee. Often there are other restrictions or fees for added service.

Some banks offer a bare-bones checking account with low monthly fee for a limited number of checks - for example, $5 for 20 checks at KeyBank (30 cents each after that) and $4 for 15 checks at Sky (50 cents each after that).

Interest-bearing accounts typically require $1,000 to $2,500 or more on deposit to qualify for interest ranging from a fraction of 1 percent to 2.5 percent or even 3 percent or more for very large balances.

A number of area banks reward customers for doing all or most of their business at one institution. For example, Huntington National Bank's “total relationship” plan counts balances of checking, savings, IRAs, mutual funds, loans, and mortgages toward the $15,000 to $50,000 required for the bank to waive monthly charges for various interest-bearing checking accounts.

Banks also give special deals to seniors (often totally free checking) and to students. People's Banking Co. in Findlay and McComb, for example, offers a “Smart Start” account to students and others new to banking - including contributing $25 to begin with.

It pays for consumers to read the fine print of whatever checking plans they choose. Hidden in the disclosure statements are numerous charges, fees, and penalties.

Among them: stop-payment on a check, typically $15 to $27; balance inquiries by phone, $2 or so; an extra copy of a monthly statement, typically $3 to $5; replacement of an ATM card, often $5 to $8; and dormant-account fee, $5 to $10 a month. Charges may be imposed for counter checks, emergency checks, and excessive calls to “help” lines.

Getting help balancing a checkbook or researching past account activity is getting expensive. Monroe Bank & Trust and Sky Bank, for example, charge $20 an hour. Fifth Third charges $24 an hour for research. Charter One charges $10 for the first 10 minutes of research or checkbook-balancing and $5 per 15 minutes after that. Copies of research documents are $1 at Sky and $2.75 at Fifth Third.

It can also be costly to be a banking dropout. Two years ago, only three area banks charged non-customers a fee to cash checks drawn on those banks. Now, six do: Five charge $5 for non-customer check-cashing, and Fifth Third charges $8.

A recent survey of 350 institutions in 35 cities would seem to indicate that the local fees are higher than national averages. Monthly service fees average $6.21 around the United States, according to Bankrate.com, a bank-monitoring firm in North Palm Beach, Fla. The Toledo-area average is $6.75. Bounced-check charges average $24.45 nationally, nearly $3 less than in the Toledo area.