U.S. banks may end free checking accounts: report

[babylonsister]

http://www.reuters.com/article/idUSTRE65G0I920100617?type=domesticNews&feedType=RSS&feedName=domesticNews

U.S. banks may end free checking accounts: report
Thu Jun 17, 2010 12:55am EDT


(Reuters) - Bank of America Corp and other U.S. banks may introduce new fees on basic services and eliminate free checking to replace revenue lost to new banking regulations, the Wall Street Journal said.

The move is expected to hurt retail clients who could be asked to pay new monthly maintenance fees on the most basic accounts that do not generate a lot of activity, the paper said.

To avoid a fee, customers will have to maintain certain account balances or frequently use other banking services, such as credit and debit cards, automated teller machines and online accounts, the Journal said.

Banks incur an expense of between $250 and $300 a year to maintain each of the roughly 200 million checking accounts, the paper said citing industry estimates.

Bank of America may lose more revenue than most other big banks because it is in the process of dismantling its checking-overdraft program in the face of new restrictions.

From this summer, banks must receive customer permission before they can charge for overdrafts.

However, in March, Bank of America announced plans to suspend overdraft fee charges on all debit card transactions from this summer.

Bank of America could not immediately be reached for comment.

[rucky]

1. I bet we can all find a credit union that won't.

fuck off, banks.

[Sherman A1]

2. Precisely

I have had free checking for years. The name on the building has changed multiple times as one bank bought out another, but the account has remained free.

We will have to see where this one lands before making any decisions as the bank is within walking distance and I do most of my banking online so I will wait and see.

[rucky]

9. Just the fact that - in a "free market" - we see headlines about decisions like this

like this that are uniformly made by the entire banking industry. It shows they're running an organized racket on their own so-called customers. Maybe some independent banks will ignore the call, but the big banks are in it together.

[DailyGrind51]

15. Hey, you state's attornneys out there, you have a RICO case just begging for warrants!

[Dr.Phool]

3. Exactly.

I always had good, friendly service at Wachovia. Now Wells Fargo is in full transition mode, and they're calling me EVERY day to try to sell me some nifty new service that I don't want or need, and especially don't need at $10.00 per month.

The credit union is looking better and better.

[Lasher]

5. But then you get killed with foriegn ATM fees.

My bank has already been charging me for online service so maybe they won't try to hit me with a charge.

[rucky]

7. credit unions have no-fee ATM exchanges

find a credit union ATM and you're in. I live in a town of 20,000, and there are 3 or 4 of them here.

[Lasher]

11. My big bank has ATMs everywhere.

This is throughout my state and others. If I'm here in WV or in Kentucky, for example, I have no trouble finding an ATM where I can withdraw money without getting hit with a fee.

Now contrast that with probably going far out of my way to get to one of the few local-only ATMs that a credit union is going to have.

[rucky]

12. here's what I do in that situation...

go to a supermarket, buy some gum w/ the ATM and get cash back.

[Lasher]

13. I have considered that option.

But it's clear the big banks offer an advantage with their plentiful ATMs.

[Liberal In Texas]

22. And my CU refunds ATM fees if we use one that isn't free.

We do this all the time, just present them with the receipt with the next deposit and they refund the fee.

I don't know why any regular joe still uses a bank.

[tammywammy]

29. Mine does as well.

If you're out of town and need cash you can always buy something with your debit card and get cash back. There are ways around the fee some impose.

[Statistical]

26. Maybe some CU refund ATM fees like USAA Savings Bank does.

USAA has no ATM but I can use any ATM in the world and USAA refunds the ATM fees (plus charges no fee themselves).
I even got cash out in Mexico. :)

I think it is limited to something like 5 uses per month but I never need even that many trips to ATM machine.

[Lasher]

34. You are correct according to replies just upthread.

Liberal In Texas says he needs to show a receipt but it would be even better if this refund were to occur automatically. Now this is interesting. The world would be my oyster with every ATM at my beck and call.

[Statistical]

35. There may be some automatic ones....

USAA is automatic. Pretty easy for them to spot.

I mean ATM charge: $21.50. What ATM do you know lets you get singles and quarters? Obviously the $1.50 is the charge and $20 the cash.

Same thing with
$52.50
$100.75
$83.25
etc

On the first of every month they sum up the fees and add it back to the account.

[Lasher]

39. I do believe it comes in as two charges:

One for the money ($20) and a separate charge for foreign ATM fee ($1.50) I've not had a fee like that in a long time and I'm too lazy right now to dig into my old statements to confirm this.

And guess what - my bank hits me with a charge when I use somebody else's ATM. So they literally get me coming and going.

[Greyskye]

33. My credit union reverses bank ATM fees

You can do it in a few seconds from your online account. Flag the ATM service fees, and the charges go away.

I still try to find a credit union ATM so I don't have to deal with it; but it's not bad.

[City Lights]

27. Yup! We're in the process of switching to a credit union.

We still use our bank account for all the auto withdraws we have set up, but once we get those changed there will be no reason to keep it open.

[WestSeattle2]

31. I haven't used a commercial bank in almost 20 years - Credit

Unions are the way to go. Why individuals choose to do business with commercial banks is beyond me.

[Donnachaidh]

4. the credit unions will LOVE this -- go for it B of A!

:rofl:

[Lasher]

6. Banks incur an expense of between $250 and $300 a year to maintain a checking account.

Bullshit. I don't believe that for a minute.

[rucky]

8. You know how much it costs...

to monitor a checking account that's about to be overdrawn, and hold a series of checks to make sure they go through from largest to smallest, so they can capitalize on overdraft fees from all the checks and not just the biggest one?

It's hard work.

[customerserviceguy]

25. It's the stupid ways that they do things

I get this all the time, people think that when they push the buttons on their computer, the money gets electronically transmitted to my company's account. I have to patiently explain that the bank doesn't mail out a check until one or two business days after they push their button, and the payment goes through the regular mail stream along with the check that their neighbor just wrote out at his kitchen table. Of course, it has to get processed manually by our system, and that takes a couple of days, so that's why the computer sent them a "PAST DUE" notice.

Doing things that way is costly. If you figure the costs that banks have in maintaining all the machines that produce that paper, and the postage amounts, it gets pretty expensive. It's like those machines on "The Flintstones", they look like modern machines, but inside, there's some little animal working it's butt off to get something done.

[Lasher]

36. I didn't know about this.

Do you receive checks like this from lots of different banks, or from just one? And do you think it's possible that this Flintstones phenomenon could be relatively unique to your company?

[customerserviceguy]

40. The utility company I work for

gets checks in the mail from the vast majority of banks, in fact, I really am not aware of any financial institutions that do electronic payments to us. I suppose I don't hear complaints from the folks whose banks figure out how to get payments to us "on time", so I wouldn't be cognizant of them.

I know that banks use electronic means of paying other banks, such as when you pay off your Chase Visa card from your B of A checking account. But I'd be willing to bet that when your department store cards, your local utilities, and your car payment get paid, it's by check sent one or two business days from the date you push the "send" button on your computer, more often than not.

[AndyA]

10. The banks that charge customers for checking accounts can stuff it.

They have access and use of the money in those accounts, it helps them meet their on hand requirements. The only reason it would cost a bank $250-$300 a year to maintain a checking account is to pay excessively high executive salaries.

Most banks handle checks electronically these days. You don't get your canceled checks back unless you pay extra.

Bank costs are high because banks overpay their executives. Period. I will close accounts and go elsewhere if I am charged for them, that's ridiculous. Cut executive salaries down to something reasonable, and save millions every year.

[KharmaTrain]

14. So Much For the "Paperless" Society

And they pulled this $250-$300 figure out of whose ass? :rofl:

I'm soooooooooo old I remember when you'd get a bank statement every month with your canceled checks, gratis...free. Now they will mail a quarterly statement unless you pay to have monthlies sent. And, yep, dare to run under a $500 balance and watch the service charge show up. It's the nickle and diming games banks play to scrounge up cash. And be assured, if you have more than $100,000 in that bank, those fees vanish for some mysterious reason.

[rucky]

They just said it "cost" them that much.

they didn't say how profitable it was for them to do it that way.

[KharmaTrain]

17. Well Said...

and most people who are hit with these fees don't realize it...only look at the balance and hope for the best.

[Gaedel]

32. Probably

They took all of their employees involved in handling checking accounts, their share of office space and computer time, and a pro-rata share of the bank hierarchy and divided by the number of checking accounts.

[Mugweed]

16. I've been trying to get away form BOA for 6 months now

I closed my savings and checking accounts in January. They decided later on that same day to credit my savings account with $0.01 "interest"...then charge me a $5.00 maintenance fee. Each month I've been calling them to close the account. Each month it gets "closed", then credited with anything from $0.01 to $0.11, and then charged $5.00. I just got off the phone with a rep and said that if this happens again next month I am calling the local news networks, then the Better Business Bureau.

[babylonsister]

20. Holy moly. What a mess. But it sounds like

BOA's mess; such a big corp., they can't fix this problem? I hope they don't expect you to pay those fees.

[canoeist52]

28. Happened to us too.

Took three tries to close a home equity line of credit properly. They charged us 50 dollars each time. They're still sending statements from other "closed" accounts at BOA. I guess we'll have to address this now that they'll be charging us. ARGHH!

[nickinSTL]

18. I left Bank of America a couple years ago

because they required a minimum balance that I couldn't meet regularly (and once you drop below it once, they charge you forever, anyway).

I moved to another, smaller multistate bank that I've been happy with.

However, if they start charging me for checking, I'll be ready to move to the local credit union at that point. Enough.

[high density]

19. No they won't

This "report" must be from the same idiots that said free credit cards were going away, too. The problem for the banks is that somebody is always going to offer a fee-free account and consumers will flock to them.

[marmar]

21. The Mob is envious of the Banksters' shakedown tactics......

nt

[customerserviceguy]

23. The bailout banks

are always going to look for ways to screw the consumer, so this isn't a surprise. Hopefully, more people will see the light and move their money away from the biggies.

I'm lucky, I just switched to a community bank that has free checking for people 55 and older, and I'll hit that age in a few more months. They probably won't start charging fees on their 'senior' accounts. Unfortunately, the credit unions around here are a joke, I've been in and out of two of them since moving here a bit more than three years ago. The CU's in the Pacific Northwest really rock, they give excellent service, but the ones I've dealt with in NY/NJ are pale shadows of the great ones I left behind.

About 30-35 years ago, there were charges for checking unless one kept a minimum balance, then interest rates started rising rapidly in about 1980. Banks realized that they'd be able to make money off of the cash that people leave stashed inside checking accounts, so they offered free ones. As interest rates dropped to nearly nothing, they felt competitive pressures to keep checking accounts free, but apparently BOA feels that it can be the game changer, since it's the biggest of the biggies.

When high interest rates come back, so will free checking.

[Statistical]

24. If you are eligible switch to USAA Savings Bank.

If not try a credit union. Today there really is no reason for anyone to do personal banking at one of the "major banks".

Most people just do because of inertia.

I used BofA for a decade despite them treating me worse and worse. A year ago I switched to USAA I wish I had done it a decade earlier. The nice thing about USAA is it is member owned. There is no reason to rip-off members because that would simply mean returning more to members.

[dembotoz]

30. did a survey yesterday online from my bank (harris)

just of it seemed to be how important is free checking

If they dumpled a lot of features that i would never use on the account would i be happy paying a fee.
Tried to be clear within the parameter of the survey that free checking was a big deciding factor as to which bank i did business with

its a coming and it will be hyped as a "way to serve you better"

bastards

[Johonny]

37. Banks incur an expense of between $250 and $300 a year to maintain

How do they not make up for it by giving no or low interest on that money already???

[Statistical]

38. Shhh. Stop giving their secrets away.

The banks want to make it seem like this cost has to be paid COMPLETELY from fees.

When reality is much more simple

ALL revenue (fees, interest) minus ALL expenses (overhead, capital losses, carrying cost) = Profits.

[customerserviceguy]

41. Back when they could lend 90% of your checking account balance

for 12 to 18 percent, they'd cover their costs, but these days, interest rates are very, very low. Postage costs keep going up, and it's not any cheaper to print and mail checks than it used to be. Besides, with the most recent banking reforms (that they themselves championed) there's far less float than ever before.

So, if you run a bank with the same careful care and concern that BP extracts oil, you're going to incur some sizable costs in having checking accounts. That was true a year and a half ago, too, but the bailout banks needed every cent of liquidity they could muster to stay in business, now that the feds have fully bailed them out, they don't need ordinary accounts.

Also, every checking account is a chance to make 'gotcha' fees on overdrafts, etc., and now that people are getting wise to this, the cash cow has gone dry.