The average monthly fee for a bank account in America is $12.50. That’s a total of $150 per year gone to fees.
In September 2015, the Economist reported that about 8% of American households didn’t have bank accounts in 2013. Half claimed that it was too expensive. Financial services were said to be the culprit. Minimum monthly balances, high monthly fees, and unexpected fees were reasons for this perspective. In 2015, the Federal Deposit Insurance Corporation also released a report that stated about another 20% (24.8 million) of U.S. households were underbanked in 2013. This means they had bank accounts but sought other financial services to avoid the cost of banking. These numbers were predicted to rise.
Two of the reasons for not banking, came to not having enough money and feeling that account fees were too high and unpredictable. These made up 49% of the total reasons according to the report.
Why are American bank accounts so expensive?
After the 2009 Global Financial Crisis, banks tightened up lending. This meant that it made less money on traditional loans such as mortgages. Instead, American banks turned to bank account fees to make up for the difference.
Will banks accounts become too expensive in Australia?
According to Smart Company, Australian banks performed well since 2012 and even achieved more worth at one stage than the entire European banking sector. But news reports since 2014 are putting pressure on banks.
This can influence the prices Aussies have to pay for bank accounts. Commodity prices have been taking sharp plunges, there are tighter lending standards and international investing into Australia has become more expensive. These combined factors mean banks are facing rising expenses.
Bloomberg reported earlier in 2016 that, "Australian bank bonds haven’t been this expensive to insure, compared to U.S. financial debt in more than a decade." Along with that, Westpac disclosed in an email that “[t]he industry is facing a lot of pressure with significant increases in wholesale funding costs and increased capital”.
It is possible that Aussies will see higher margins than before on their banking account costs. This won't necessarily mean bank accounts will become too expensive, but definitely more expensive than in the past.
How American and Australian banks compare to each other in terms of cost
Although there are banks in the United States that offer free accounts, these tend to be local smaller banks with less national and international infrastructure. Many of them also require big opening balances. These can include banks like Ally Bank, EverBank, First National Bank of Omaha, and Colorado Federal Savings Bank as examples.
Bigger banks, such as Bank of America, charges a $14 monthly maintenance fee for a regular checking account. This means $168 in fees gone to the bank.
There are a handful of bank accounts in Australia that don’t have monthly fee no matter what. Most will require that you meet a monthly minimum deposit to get the $0 monthly fee.