Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Free Checking Abounds at Area Banks but Yields on Deposits Are Sure to Cause Customers to Bristle

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Free Checking Abounds at Area Banks but Yields on Deposits Are Sure to Cause Customers to Bristle

Article excerpt

It's a good news/bad news situation for depositors at Pittsburgh- area banks.

On the upside, people looking for free checking accounts have plenty of choices. On the downside, anyone counting on a decent return on their money will surely be disappointed.

Overall, seven of the region's top 10 banks offer free checking accounts with no minimum balance requirement and no maintenance fees, according to the Pittsburgh Post-Gazette's annual bank fee survey. That's unchanged from last year and just one less institution offering free checking than two years ago.

Even among the three banks without free checking - PNC, Citizens and First Niagara - it's fairly easy for customers to get a free account by jumping through a hoop or two.

Market leader PNC waives the fee for customers 62 and older, or for anyone who makes at least $500 in direct deposits per month.

At No. 2 Citizens and No. 5 First Niagara, it's even easier to get a waiver. Customers need only to make one deposit per statement period in any amount, even as little as a penny.

Still, free accounts don't earn interest. Customers who want a checking account that earns interest will have to maintain a balance at Pittsburgh's leading banks ranging from $500 to $5,000 to avoid a monthly fee ranging from $5 to $15.

That's where the downside comes in.

Interest rates have been hovering around historic lows for some time, with little improvement over the last year.

The average yield on interest-bearing checking accounts among the top 10 banks here is 0.036 percent, up a pinch from 0.027 percent last year.

The increase is hardly cause for breaking out the party poppers. It means customers with a $5,000 balance would earn about $1.80 in annual interest, up from $1.35 last year.

Customers with bigger balances that qualify for higher rates aren't faring much better. The average return on the top-yielding deposit account including checking, savings or money market accounts, is 0.36 percent locally, up a smidgen from 0.34 percent a year earlier.

That works out to about $72 a year in interest on a $20,000 deposit, compared with about $68 last year.

Among the higher rates available locally are found at PNC, which is paying 0.8 percent on its Performance Select checking accounts that require a $5,000 balance; at Dollar Bank, whose FreeMoney savings accounts earn 1 percent on balances up to $20,000 and 0.5 percent on balances between $20,000 and $250,000; and at Huntington, which is paying 0.5 percent on its Relationship Money Market accounts that require a $25,000 balance.

For a limited time at Citizens Bank, customers who deposit at least $10,000 in new money in the bank's Growth Savings account earn an introductory rate of 1.25 percent. The rate is guaranteed through February. …

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