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Bank survey discounts size benefits

A new study of more than 1,200 bank accounts finds that large banks often rank near the bottom when it comes to offering the best checking deals.


© St. Petersburg Times, published October 4, 2000

A checking account survey released Tuesday is poking more holes in the theory that bigger is better.

The nation's two largest banks by assets, Bank of America Corp. and Citigroup Inc., have 10 of the 20 worst checking account deals in the country with high fees and low interest rates, according to, a North Palm Beach financial rating company.

Tiny banks such as Bay Financial Savings Bank in Tampa and an assortment of Internet-only banks offer the most attractive deals.

For a customer keeping an average $1,500 balance, the difference can be dramatic. That customer could earn $75 a year banking with Presidential Online Bank, an Internet bank based in Bethesda, Md. Sign up for an account with Northern Trust Bank in Phoenix instead, Bankrate said, and the customer could wind up paying $275 a year.

"It really pays to shop around," said Greg McBride, a financial analyst with Bankrate.

Bankrate looked at more than 1,200 accounts and based its rankings on customers keeping a $1,500 monthly balance for one year with an average of 12 transactions a month and one bounced check a year.

By and large, banks in cyberspace ruled. Eighteen of the top 20 deals in the country were through Internet banks. The online sites of brick-and-mortar branches weren't as consumer-friendly, with many offering different rates depending on where their cyber-customers live.

Bay Financial, a Tampa bank with an office on Sheldon Road, was the only bank in the Tampa Bay area to make the list of the best brick-and-mortar branches, placing 14th.

A customer with a $1,500 balance could earn $16.70 a year through Bay Financial's interest-bearing NOW checking account. The bank has rated as high as No. 1 in previous Bankrate surveys.

As in earlier rankings, large banks tended to offer the poorest rates and highest fees. Megabanks, however, point out that they offer a wide range of checking options to customers depending on their financial circumstances.

"What their survey is showing is a menu of prices and not necessarily what people select," American Bankers Association spokesman John Hall said. He compared it to focusing on the highest air fare available for a flight regardless of whether anybody pays that much.

Hall noted a July telephone survey by the association in which 46 percent of 1,000 banking customers polled said they paid nothing for checking.

Four of the five worst deals were at Bank of America branches on the West Coast. Many of those branches were part of the former BankAmerica, which merged with NationsBank in 1998 to create Bank of America. The current Bank of America branches in Florida were part of NationsBank.

Three Miami branches, one owned by Union Planters and two by Citibank, were among those offering the 20 worst deals.

While Bank of America, First Union, SunTrust and other large banks that dominate Florida don't offer good deals, they were not the worst of the worst. That didn't mitigate McBride's criticisms of the megabanks' pricing.

"Let's not say they're better. Let's say "less bad,' " he said. "Just because they didn't make the 20 worst . . . doesn't mean they aren't bad. We surveyed 1,215 accounts."

Bankrate released the rankings Tuesday in the second half of its semiannual survey. In the first half released Monday, Bankrate reiterated findings of the Federal Reserve that checking account costs have been rising steadily.

Compared with two years ago, the fees for bouncing a check have risen from $21.75 to about $24; the average monthly service fee on interest-bearing accounts has climbed 9 percent from $9.59 to $10.43; and the average yield on interest checking accounts has dipped from 1.17 percent to 1.33 percent despite rising interest rates.

Almost 90 percent of institutions tack on surcharges for non-account users of their ATMS, up from 67 percent two years ago. The average fee for an ATM withdrawal from a bank where the user does not have an account jumped 10 cents to $1.43.

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