Several large national banks are putting an end to free checking and transitioning customers into monthly checking fees of $10 per month or higher, unless the account meets certain stipulations.
The fee increases are a fast reaction by banks in response to government regulations that have decreased banks' revenue and earning power. Specifically, the Dodd-Frank financial reform law has placed a limit on the fees charged to process debit card transactions. The reform law doesn’t allow more than 12 cents on each debit card transaction. 45 cents was the average charge on debit transactions.
Overall, Wells Fargo meets consumers at the negotiating table somewhat better than the other banks, with low $5 monthly maintenance fees. Wells Fargo, unlike other larger banks, requires either a $250 monthly minimum deposit (most banks want twice as much) to waive the monthly fee or a $1,500 average daily balance each month. Wells Fargo sent notices to its customers last July warning that the end of free checking was near.
Most of those stipulations required to avoid monthly fees include maintaining a minimum monthly balance average and utilizing certain bank features no more than ten times in one month. Many consumers and account holders will have a difficult time avoiding the monthly fees that will total nearly $120 per year in the most basic of checking accounts and $250 for other accounts.
MB Financial has eliminated free checking. Bank of America, who just paid out a settlement to account holders regarding illegal bounced check fees, has raised its monthly checking account fees a full 25 percent. Bank of America checking was $8.95 per month but has risen to $12 each month.
Chase also has raised its basic checking fees to $12 per month. US Bank has a $6.95 monthly maintenance fee and an $8.95 paper statement fee. Like most banks, US Bank will waive the monthly maintenance fee if the customer has direct deposits that total $500 every month or maintains an average daily balance of $1,500. Ironically, perhaps, is that Chase had been giving away free checking accounts to anyone who opened an account with a $100 deposit although Wells Fargo had ended the practice almost a year ago.
There are still alternative accounts available for consumers. Credit unions, local community banks, and online banks don’t have fees. Other banks, MB Financial for example will continue student accounts, senior accounts and those who use limited checking.
Although consumers, particularly account holders with limited or fixed income may not appreciate the yearly total they will now dole out to banks for “account maintenance,” bank executives regard the elimination of free checking as a means of staying competitive. They also feel that the fee schedules are designed to keep consumers utilizing their bank accounts the same way they did before the increase.
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