Free Checking No More?
The Obama Administration worked diligently to serve the public by eliminating or minimizing fees that banks can charge. However, in its wake, the act intended to protect consumers is requiring banks to be more creative about how to recoup and make money. The end result is that free checking may be a thing of the past.
(Minyanville) - Some of the biggest banks in the world will remind consumers that every action indeed does have a reaction in 2011. In late July 2010, President Obama signed new bank regulation laws limiting when and how financial institutions can charge customers for services like overdraft transactions and ATM withdrawals. Ironically, these changes, which were designed to protect consumers from exorbitant fees, have left banks tasked with identifying new ways to make money. Based on the latest moves by some of the country's largest banks, it could mean the final death of free checking. Many analysts also warn that debit cards as we know them may soon face a similar fate.
In July, Wells Fargo (NYSE:WFC) announced that it would no longer offer free checking, now charging new "Value Checking" customers $5 a month unless they make a $250 monthly deposit or maintain a minimum $1,500 balance in the account. Likewise, Fifth Third Bank (NASDAQ:FITB) stopped offering any free checking options to new customers, unless a direct deposit or automatic savings plan feature is utilized.
And while meeting certain requirements to avoid fees is not necessarily new, the hurdles are certainly getting higher.
Beginning February 8, JPMorgan Chase (NYSE:JPM) customers with a "Chase Checking" will need at least one direct deposit of $500 a month, or will need to make five debit card transactions per statement period, in order for the monthly service fee ($6) to be waived. The direct deposit amount was not stipulated previously.