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Bank overdraft fees reach a new high

The overdraft fee isn't only one of the country's most reviled banking fees, it's also on what seems to be an unstoppable rise.

The average overdraft fee has set a new record high for the 16th consecutive year, reaching $32.74, according to a survey from Bankrate.com. Banks levy an overdraft fee when they cover a consumer if he or she makes a purchase that puts their account into negative territory.

Overdraft fees have come under fire from the Consumer Financial Protection Bureau (CFPB), which in July found that the median debit card purchase is only $24. Adding on an average overdraft fee of $32.74 means consumers may be paying far more to the bank for that coverage than the actual purchase amount. Because consumers usually cover their deficit after a few days, the overdraft fees equate to a loan with an interest rate of more than 17,000 percent, the CFPB said.

Consumers should take steps to make sure they don't incur these fees, Bankrate.com chief financial analyst Greg McBride told CBS MoneyWatch. These include signing up for texts and emails to alert you to your checking account's balance, as well as setting up a service to transfer funds from your savings account if your checking account dips into negative territory.

"With mobile account access, there's no excuse for not keeping tabs on your account balance," McBride said.

Last year's increase on overdraft fees was "right in line with inflation," he added. "It's not that the magnitude [of the increase] is all that big, it's the regularity with how the rate continues to creep higher."

Americans are increasingly using their debit cards to cover day-to-day purchases. But the CFPB study found that a small slice of consumers -- just 8 percent -- are responsible for 75 percent of all overdraft fees.

For some consumers, an overdraft fee might be the lesser of two evils, McBride said. "Consumers know that they have certain bills that have to get paid, and in some cases it might be cheaper to pay the overdraft fee than to have a late payment on your mortgage," he noted.

The highest overdraft fees are $34.80 in Philadelphia and $34.47 in Milwaukee. At the other end are San Francisco, at $26.74, and Los Angeles, at $29.47.

Consumers are also getting hit by higher ATM fees, the Bankrate.com survey found. The average cost for going outside the ATM network is $4.35 per transaction, a new high for the eighth year in a row. ATM fees include both the fee levied by a consumer's bank, as well as the fee charged by the out-of-network financial institution.

The study found the worst city for high ATM fees is Phoenix, where the average ATM fee is $4.96 versus the lowest ATM fees of $3.75.