In Local Banking, Smaller Often Is Cheaper Checking Over Charges At 63 Local Banks, You'll Find That Fees Vary Widely.

In much of the retail world, bigger equals cheaper.

Supermarkets. Specialty warehouse stores such as Home Depot and Staples. Mass merchandisers such as Wal-Mart and Kmart. All have thrived on a simple concept: trading low margins for high volume. A customer might prefer the personal service or products at a smaller store. But for price, big is usually the way to go.

Not in the world of retail banking.

In banking, higher volume does not mean lower prices - unless you happen to be the one bringing high-volume business to a bank.

An Inquirer survey of checking-account terms and fees at 63 institutions across the Philadelphia region provides local evidence of a phenomenon cited by many banking-industry observers: For basic banking services, the better deals are available at smaller banks, savings and loans, and credit unions.

A comparison of average fees at the largest and smallest banks in the survey illustrates the distinction. In almost every category, fees vary dramatically, and fees at the largest banks are substantially higher than at the smallest banks.

Consider the monthly checking fee, charged by most banks if a customer fails to keep a certain amount of money in his or her checking account.

It ranges from $9 to $11 at First Union, PNC Bank and Mellon PSFS, the three multistate banks left to dominate the region with this month's final disappearance of the CoreStates name.

At the 18 smallest banks and savings institutions in the survey, the average fee is closer to $5. (None of the three credit unions in the survey charges a checking fee.)

Or consider the minimum balances themselves, which range from $50 to $1,500.

At PNC or Mellon, an ordinary checking-account customer has to maintain an average daily balance of $1,000 to avoid the fee. At First Union, the target is lower - $600 in Pennsylvania and $500 in New Jersey - but the requirement is an absolute minimum, not an average.

At the 15 smallest banks using the minimum-balance method, the requirement averages $180, about two-thirds lower than First Union's.

The pattern persists across a variety of fees, including ATM-withdrawal fees, stop-payment fees, bounced-check fees, and ``returned item'' fees - the fee that most banks charge if a check you deposit doesn't clear. Even fees for photocopies are substantially higher at the largest banks.