Many Pittsburgh banks offer free checking, bucking the national trend

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At the same time that free checking accounts have been drying up nationwide, consumers in Pittsburgh looking for no-minimum-balance accounts continue to have an oasis of choices, a Pittsburgh Post-Gazette survey of local banks shows.

Eight of the region's top 10 banks, or 80 percent, offer free checking. That compares with nine banks in the previous survey one year earlier.

Meanwhile, a survey last month by online financial site Bankrate.com found that the percentage of big banks nationwide offering free checking had tumbled to 39 percent, down from 45 percent last year, 65 percent two years ago and a peak of 76 percent in 2009.

Banks have been cutting back on free checking and boosting service fees to make up for revenue that was squeezed by new regulations in 2010 and 2011 capping debit card swipe fees and barring banks from charging overdraft penalties for debit card purchases unless customers expressly opt in for overdraft coverage.

PG graphic: Ducking bank fees
(Click image for larger version)

Still, free checking remains plentiful in the Pittsburgh region.

Among the top 10 banks, No. 2 Citizens and No. 5 First Niagara are the only two that don't offer free checking.

But even customers of those two banks can get no-minimum, no-fee accounts by jumping through a few hoops.

Citizens will waive minimum balance and monthly fee requirements on its regular and interest checking accounts if customers make five qualifying transactions per month, including such things as ATM withdrawals, debit card purchases, checks paid and online bill payments.

At First Niagara -- which is dropping no-strings-attached free checking except for students, effective Dec. 1 -- the $300 minimum balance or $7.50 monthly fee on regular checking accounts are waived for customers who have their paychecks or other recurring checks directly deposited into their accounts.

Overdraft fees

On the down side, customers of Pittsburgh banks are paying higher than average overdraft fees and, like the rest of the country, are seeing what little they are earning on their deposits shrink even further.

Overdraft fees average $35 a pop among the region's top 10 banks, ranging from a high of $37.50 at Huntington to a low of $31 at Northwest Savings. That compares with an average overdraft fee of $31.26 in the nationwide Bankrate.com survey.

The most common overdraft fee locally is $37 vs. $35 nationwide. Four local banks -- PNC, Citizens, Huntington and First Commonwealth -- offer customers a small break by charging a lower fee in the $25 range for the first overdraft per year.

Besides those per-item overdraft fees, all the banks except for Northwest and ESB charge an additional fee that kicks in when an account remains overdrawn for a certain number of days. For example, market leader PNC charges $7 per day starting on the fifth day that an account is overdrawn, up to a maximum fee of $98.

On the plus side, No. 6 Huntington is unique in the region for giving customers a 24-hour grace period to get their accounts into the black before assessing any fees. The Columbus, Ohio-based bank also offers free automatic transfers from savings to checking accounts to cover a negative balance, something other banks typically charge $10 to $12 to do.

Losing interest

With interest rates stuck at historic lows, depositors have been getting used to near imperceptible returns on their money.

Over the last year, the situation has only gotten worse.

The average annual yield on interest-bearing checking accounts among the top 10 banks here fell to a decimal point-challenging .03 percent, down from .06 percent last year. That works out to about $3 in annual interest on a $10,000 balance.

Even customers with big balances don't fare much better. The average return on the top-yielding checking or savings account (excluding certificates of deposit) averaged .46 percent among the top 10 banks, down from .625 percent a year earlier. That works out to about $46 a year in interest on a $10,000 deposit.

Dollar Bank and S&T offer some of the best returns in this market.

At Dollar, customers with certain accounts can choose between earning a flat 1 percent on balances up to $100,000, or 1.5 percent on the first $20,000 and 0.1 percent after that.

At S&T, customers with preferred savings accounts can earn .75 percent on balances of up to $100,000.

For consumers willing to move their money around, some banks also offer special promotional rates.

At Citizens, for example, customers who deposit $10,000 can earn an introductory 1 percent on balances between $3,000 and $10,000.

Other fees

On the fee side, more local banks are starting to impose a charge on customers who want to get monthly statements in the mail instead of viewing their accounts online.

Since last year's survey, Citizens and FNB have joined Dollar, S&T and First Niagara in charging for paper statements on certain accounts.

Dollar and FNB charge customers with free checking accounts $2 for mailed statements, while First Niagara charges $5 for customers with e-checking or student accounts.

At S&T, mailed statements cost $2 for all customers except those with Four Star senior accounts. At Citizens, they cost $2 except for customers with premier and private banking accounts or those under age 18 or over 64.

Last year, several of the nation's biggest banks tried to raise new revenue by testing debit card fees, including Bank of America, which announced plans to start imposing a monthly fee of $5. But customer outrage forced the banks to cancel their plans.

Locally, none of the top 10 banks charges their customers for using a debit card.

Some banks nationwide also have been eliminating debit card reward programs, but so far in this region the majority of big banks continue to offer them.

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Patricia Sabatini: psabatini@post-gazette.com or 412-263-3066.


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