Will We See the End of Free Checking Accounts?
Category: News and Notes- fhuff- 3:09 pm/ July 18, 2010Are free checking accounts on the endangered species list? Maybe. More banks and credit unions have added fees to cope with federal laws regarding overdraft charges and restrictions on interchange fees, which are paid by merchants when accepting cards that use networks such as Visa or MasterCard.
Free checking accounts have no monthly maintenance fees and usually have no minimum balance requirements. Banks were able to offer free checking because they earned fees from other services, such as bounced checks and customer use of ATMs that were out of their networks. According to NorthJersey.com:
Overdraft fees on ATM withdrawals and debit-card purchases have been particularly lucrative for banks, generating $18 billion to $23 billion, according to a study by Novantas LLC, a New York consulting firm, and Informa Research Services. These fees typically range from $20 to $35 per transaction.
So what can you do if your bank decides to start charging for a checking account that was previously free? Shop around to compare the features of several checking accounts to decide it you should remain loyal to your current bank. Also, exercise your right to opt out of overdraft protection on your current checking account. Banks can automatically sign you up for overdraft services if you don’t opt out.
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