Free Checking Becomes Even Rarer

The availability of free checking is increasingly becoming a relic of the past, though bank fees are "completely avoidable," according to Greg McBride, senior financial analyst at personal finance website, Bankrate.com.

Bankrate.com released its 15th annual checking survey on Monday, which found that 39 percent of non-interest checking accounts were free, down from 45 percent last year. Bankrate.com collected information from ten banks within each of 25 large U.S. markets. Free checking peaked back in 2009 when 76 percent of these accounts were free, according to Bankrate.com.

"We continue to see a decline in the availability of free checking accounts but that doesn't mean everybody gets stuck paying a fee because we continue to see increase in fee-waiver policies," McBride said. Those policies include checking accounts with direct deposit and minimum balances.

Banks are hoping customers will have stronger banking relationships and more opportunities to make a profit, McBride said.

Two regulatory changes to the banks' revenue stream that underwrote free checking have contributed to its decline, he said. First, in 2010, regulatory changes directed when banks can apply overdraft charges. Second, on Oct. 1 last year, financial companies had to cap the amount they charged for debit card swipe fees in accordance with the Dodd-Frank Act.

With regulations such as those, free checking was the "obvious casualty," he said.

Despite the increase in fees, the "message is the same," McBride said. "It's best to shop around."

The average ATM surcharge charged by an ATM operator to a non-customer rose 4 percent to a new record of $2.50, according to the report. Bankrate reported that ATM surcharges increased for the eight straight year.

Here is a list of the five cities, including two ties, of the surveyed cities that charged the highest ATM surcharges to non-customers.