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  • Writer's pictureRoy Urrico

Study Reveals NSF Charges at Record High; ATM Fees Falling

By Roy Urrico

Finopotamus aims to highlight white papers, surveys, analyses and reports that provide a glimpse as to what is taking place and/or impacting credit unions and other organizations in the financial services industry.

Overdraft/non-sufficient funds (NSF) charges are at a record high of $33.58, up slightly from $33.47 in 2020, according to’s annual “Checking Account and ATM Fee Study.” In addition, the average ATM fee fell to $4.59, down for the second consecutive year, and about 3% below the record high of $4.72 set in 2019.

New York City-based consumer financial services company Bankrate, which has surveyed non-interest and interest accounts and their associated fees for more than 20 years, convened a survey group consisting of 245 financial institutions in 25 large U.S. markets. The study, conducted July 19 to August 9, 2021, included 236 interest and 236 non-interest checking accounts as well as associated ATM and debit card fee policies.

Key study takeaways include:

· For interest-bearing checking accounts, average monthly fees hit a record high ($16.35), and the average balance needed to avoid a monthly fee climbed 31% from 2020’s record high of $7,550.42 to $9,896.81, while average yields fell to a record low (0.03%). The average yield fell to a record low of 0.03%, down from 0.04% last year.

· For non-interest checking accounts, 48% of accounts available are free, the highest since 2010; and the average monthly fees and balance required to avoid a fee both fell to 10-year lows ($5.08 and $506.62, respectively).

· In metro areas: Philadelphia had the highest average overdraft fee ($35.70), and Cincinnati’s the lowest NSF fees ($30.42). Atlanta has the highest ATM fee at $5.23, and Los Angeles the lowest ATM charges at $3.90.

A Summary of Other Findings

Overdraft (NSF) Fees

The average cost to overdraw a checking account, or the average fee for non-sufficient funds, rose for the third consecutive year to a record high of $33.58, up 0.3% from the previous record in 2020. The commonest fee, for the 13th consecutive year, remains $35.

The report noted that depending on the bank or credit union chosen, consumers could pay more for overdrawing an account — and it is possible to roll up several overdraft charges in a single day.

Greg McBride, Bankrate

Bankrate’s Chief Financial Analyst Greg McBride, CFA suggested ways for account holders to mitigate some fees. “Before initiating transactions, use your bank’s app to check your available account balance to avoid overdrafts.” He emphasized that a check deposited the previous day might count toward the total balance but also may remain unavailable for immediate withdrawal, possibly triggering an overdraft fee. “Set up a link between your checking account and savings account so you automatically cover any shortfall and avoid overdrafts. Also, sign up for email or text alerts that let you know when your balance gets below a designated threshold. Be proactive to avoid overdrafts as inadvertent slip-ups do occur.”

Interest and Non-Interest Checking Accounts

Almost 80% of interest checking accounts have a balance requirement — either in the checking account or across multiple accounts — to avoid a fee. According to’s annual 2021 report, only 12% of interest checking accounts waive the fee based solely on direct deposit, down sharply from 21% last year. Further, less than 8% of interest checking accounts are free without stipulation.

For non-interest accounts, the average monthly fee is $5.08, down 3.6% from $5.27 last year, and the lowest since 2011. The average balance requirement for fee avoidance is at a 10-year low of $506.62, down 15% from $593.52 last year.

In addition to the high percentage of free accounts, 50% of accounts waive the monthly fee with some combination of direct deposit, minimum account balance, and transaction activity. Almost all (99%) of non-interest accounts are free or can become free, with 41% of accounts waiving the monthly fee solely based on direct deposit, making it the predominant fee waiver. Eighty-nine percent of non-interest accounts are either free, or can become free by having regular direct deposits.

“If you’re paying a monthly fee for your checking account or maintaining an excess balance to avoid a fee, look for one of the many accounts that are free, or can become free with nothing more than direct deposit,” McBride noted. “Forty-eight percent of non-interest accounts are free, but just 8% of interest earning accounts are free. Skip the high fees, high balance requirements, and low yields of interest-bearing checking in favor of free accounts that have no fees or balance requirements.”

ATM Fees

The average ATM surcharge, the fee charged by ATM owners on non-customers making withdrawals, was unchanged from last year at $3.08. The report noted, “This marks a rare feat, as this surcharge has increased in 20 of the past 23 years, with 2004, 2020, and 2021 being the exceptions.” However, every ATM owning bank surveyed charges non-customers.

The average fee charged by banks when its own customer goes outside the network fell for the fourth consecutive year, to $1.51, a 10-year low and down 12% from the previous record in 2017 of $1.72. The decrease comes from continued increases in the number of accounts permitting free out-of-network withdrawals, now 40%, up from 35% last year and 32% in 2019.

“Despite the increasing prevalence of free out-of-network withdrawals, that’s not the only fee to worry about,” McBride added. “Every ATM owner surveyed still charges non-customers, so avoiding ATM fees still means avoiding withdrawals outside your network. While some merchants charge a fee when getting cash back on a debit card purchase, this is still the exception rather than the rule and remains a viable way to avoid higher ATM fees.”

Additional Fee Report Insights

Has the rise of non-traditional financial institutions affected fees? McBride said, “In short, no. While the increased flexibility to avoid overdrafts and the greater availability of free checking accounts is coincident with the rise of non-traditional financial institutions, it is hard to draw a direct correlation between them. After all, the biggest banks have continued to grow deposits during the pandemic.”

Is there anything specific to credit unions in terms of how they utilize fees? “In surveys of credit unions conducted in previous years, they offered free checking accounts at almost twice the rate of banks and even when account fees and balance requirements were present, they were much lower than banks,” McBride revealed. “Overdraft fees were, on average, approximately $5 less than banks but still averaged more than $28.”


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