A good bank account can be hard to find.
Banks are charging higher bank fees, mainly on checking accounts. At the same time, the Internal Revenue Service is cracking down on offshore accounts, where some people stash money to reap higher yields.
But free checking is the biggest casualty. After peaking in 2009, free checking accounts that don't pay interest dwindled to 39 percent of all bank offerings, according to a Bankrate's 2012 Checking Survey. Last year, 45 percent of them were free. Many require higher minimum deposits to retain the "free" status.
Changes are coming to how much banks charge on their accounts after new federal banking regulations capped some bank fees. The latest example is the Dodd-Frank consumer protection law, which began limiting bank debit card swipe fees last year. Just this one regulation will cost banks $6.6 billion a year, according to Javelin Strategy & Research in Pleasanton, Calif.
Don't expect bank fees to level off next year, either, says Greg McBride, CFA, senior financial analyst at Bankrate.com. To get the most bang for your buck, weigh these accounts carefully before signing up.
Interest checking accounts. Interest paid was a paltry average of 0.253 percent in early November, according to Bankrate. And expect to pay high bank fees or meet high minimum balance requirements, says Ed Mierzwinski, consumer program director at the nonprofit U.S. Public Interest Research Group.
Take one Massachusetts-based bank, which requires a $5,000 minimum deposit to sign up for its interest checking account. However, it only pays 0.55 percent annual percentage yield. And you must also add direct deposit, or you'll be socked with $25 monthly in service charges.
"You don't want a bank with monthly fees," Mierzwinski says.
Offshore bank accounts. These are accounts opened outside the U.S., and they bear more negatives than many account holders may want, including limited access and currency risk when deposits are converted back into dollars, McBride says.
The IRS also has cracked down on offshore accounts for three years, "So there's more hassles on the tax-reporting side," says Brent Lipschultz, a principal at accounting firm EisnerAmper focusing on international financial matters.
Also, offshore accounts don't get insurance through the Federal Deposit Insurance Corp., so they're more risky. You'll need do extensive due diligence on each overseas bank before putting your money in one of them. Ultimately, these offshore bank accounts best suit people relocating overseas, Lipschultz says.
Accounts that don't fit your lifestyle. Avoid checking accounts that don't match your needs just to ditch bank fees, McBride says. Examples include accounts requiring direct deposit when you mainly deal in cash, or online checking when you frequent bank branches for your banking services.
You also may want to avoid checking accounts if they display one or both of these characteristics:
Minimum balance requirements. Many checking accounts require a minimum of $5,000 in deposits to waive monthly bank fees, but you still may be settling for a low rate of return, McBride says.
For example, one bank with branches in the Southeast and Mid-Atlantic States requires $10,000 balances to quality for its free checking account. Otherwise, you'll shell out $17 per month in checking fees. Instead, find an account with no minimum balance requirements, McBride says. That way, you can free up money to open an online savings account with slightly higher yields, he says.
Credit unions still sport the lowest minimum balance requirements for waiving fees -- $500 versus $1,115.97 for banks, according to Informa Research Services in Calabasas, Calif.
Fees to close a bank account. Want to leave your bank? That may cost you. Consumers can face myriad obstacles when switching banks, according to a May 2012 report by Consumers Union.
"Some bank policies make it challenging for customers to walk away," says Suzanne Martindale, staff attorney for Yonkers, N.Y.-based Consumers Union. "That creates customer inertia." The report found that it can take four to six weeks just to reroute automatic payments and deposits to new bank accounts.
On top of that, some banks charge customers $25 to close an account that has been open for less than 180 days, according to the same report. Banks may even charge $24 to $30 to wire money to a new bank, according to Consumers Union.
The best accounts let you be a free agent, so find one that lets you avoid fees for closing an account, McBride says.
Robert Laura, president of Synergos Financial Group in Brighton, Mich., says to protect yourself, do bank searches for consumer complaints online. These days, it pays to learn from other peoples' lessons.
Copyright 2012, Bankrate Inc.