Banking Services

GAO reviewed issues related to basic banking services, focusing on: (1) changes since 1977 in banking fees and deposit account interest rates; (2) the effects of these changes on consumers at various income levels; (3) steps banks and savings and loan institutions, or thrifts, took to provide essential banking services at little or no cost to low-income consumers; and (4) other consumer options for obtaining essential banking services.

GAO sampled 1,662 banks and thrifts, requesting data on fees and interest rates for 1977 and 1983 and mid-1985 and found that: (1) the banks and thrifts that responded to its questionnaire charged account maintenance fees or required a minimum balance to avoid fees; (2) under 1977 rates, consumers paid from $22 to $37 annually in checking account fees; (3) in 1985, consumers paid $41 to $57 a year on noninterest-bearing checking accounts, depending on income level; (4) consumers with interest-bearing checking accounts in 1985 had an average net cost of $12 to $57 if their annual incomes were less than $50,000, but net earnings of $17 if their incomes were $50,000 or more; (5) consumers who earned interest on their checking accounts in 1985, but did not pay fees, typically earned $28 to $103 annually, which generally increased with income; and (6) 35 percent of the consumers neither earned interest nor paid fees. GAO also found that, in 1985: (1) about 75 percent of the consumers surveyed had an account in addition to their main checking account; (2) these consumers earned from $86 to $396 in interest on their accounts; (3) about 75 percent of the depository institutions offered low-cost or free accounts to senior citizens, about 40 percent offered them to students, and about 15 percent offered discounted checking to the general public; and (4) credit unions and money orders were alternatives for basic services but were not fully comparable.