DawgTalkers.net Forums DawgTalk Tailgate Forum The End of Free Checking

Brought to you by the government of hope and change and the banks who will always get the money anyway.

(Like we never saw this coming. )

http://chicagobreakingbusiness.com/2010/06/end-of-free-checking-accounts-likely-coming.html

Dow Jones Newswires-Wall Street Journal |

Bank of America Corp.and other banks are preparing new fees on basic banking services as they try to replace revenue lost to regulatory rules, in a push that isexpected to spell an end to free checking accounts for many Americans.

Free checking accounts, which have been widely available for more than a decade, have been a boon to middle-class consumers and attracted low-income customers to the banking system for the first time.

Customers will likely be required to pay new monthly maintenance fees on the most basic accounts that don’t generate a lot of activity. 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.

“If you put $1,000 in a checking account and don’t do anything with it, it will be hard to get that for free,” says Sherief Meleis, a managing director at Novantas LLC, a consulting firm that advises banks.

Some consumer advocates warn the new fees will whack consumers who now manage their bank accounts to avoid such charges. “Just because you made a lot of money on overdraft fees doesn’t mean you deserve the income and doesn’t mean you need the income,” said Ed Mierzwinski, director of the consumer program for the U.S. Public Interest Research Group, a liberal lobbying group, in Washington.

The transformation of checking accounts comes at a time when banks are bouncing back from the steepest financial losses in a generation and are facing new regulations. To accelerate that recovery and recoup losses from new banking rules, financial institutions are increasingly leaning on customers who don’t now generate enough revenue for the bank.

More than half of all checking accounts are currently unprofitable, according to a report issued last month by Celent, a unit of Marsh & McLennan Cos. It costs most banks between $250 and $300 a year to maintain one of the roughly 200 million checking accounts, according to industry estimates. I find this stat completely unbelievable.

The situation is especially critical for Charlotte, N.C.-based Bank of America, which stands to 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. Starting this summer, banks must receive customer permission before they can charge for overdrafts. But Bank of America has decided to drop most of its program altogether. The nation’s largest bank, as measured by assets, said largely because of recent changes to its overdraft policy, it will forgo $600 million in revenue this year.

To generate new revenue, Bank of America is quietly testing new pricing models throughout the U.S., with most changes expected in early 2011. Executives have ruled out a flat monthly fee for all customers and are developing a tiered structure that encourages customers to increase banking activity or use other services to avoid future charges.

Bank of America customers who only want a low-volume checking account will likely be asked to pay for it. Fees will likely be waived for customers who keep their balances high, use bank credit cards or tap its investment advisers. Bank executives declined to discuss specifics of the plan, saying it is still being formulated.

“Customers will have a choice,” Bank of America Chief Accounting Officer Neil Cotty told analysts in April, of “bringing more relationships to us or paying a maintenance fee.”

Banks say they stand to lose billions of dollars in revenue from separate new restrictions on credit cards and overdraft transactions that were announced earlier this year. They could lose even more from legislation winding its way through Congress. The Senate version of the financial industry overhaul bill, currently being reconciled with the House version, contains an amendment that could limit fees banks charge to merchants for debit-card transactions.

Financial institutions warn that such a measure would trigger higher fees on basic banking products, as well as the loss of rewards programs that are tied to debit-card use. U.S. banks collected $9.4 billion in banking fees in the first quarter, representing 16.5% of all noninterest income, according to the Federal Deposit Insurance Corp.

The new regulations could reduce the industry’s service fee revenues by as much as 20%, according to Sandler O’Neill + Partners, an investment firm that specializes in the banking industry. Bank of America’s service charges are 12% of revenues, excluding securities gains, and a 20% drop in such fees would mean a loss of $2.2 billion for the bank, according to Sandler O’Neill.

It isn’t clear if new fees under consideration would completely make up for revenue that will be lost as a result of regulation. But banks aren’t waiting to find out. “We’re not sitting around to get caught off guard,” Ed Barham, chief executive of Stellar One Corp., recently told investors. The Charlottesville, Va.-based bank, he said, is “driving other sources of revenue, of fee income at the retail side especially.”

Fifth Third Bancorp, a large regional bank based in Cincinnati, dropped its free checking account late last year and now offers packages that bundle checking with other services, such as fraud alerts, debit rewards or brokerage discounts for fees of up to $15 a month. The fee can only be waived with a certain type of checking account.

TCF Financial Corp., a Wayzata, Minn., bank that used “totally free checking” as its slogan, eliminated its free checking account earlier this year and replaced it with an account that charges a monthly $9.95 maintenance fee. The bank will waive the fee if a customer keeps a certain minimum balance or has direct deposit.

I can just hear congress, and daman now: "golly, that wasn't supposed to happen when we made the new credit card rules and bailed the banks out. Guess we need yet ANOTHER DAMN law".

jc.


It's really sad that so many people are blind to the fact that no matter what the government regulates or puts restrictions on, or charges/penalizes corporations with. The corporation will always find a way to make the money up somewhere, and in the end it always comes out of the same consumers pockets that thought they scored a victory, but are too blind to see the truth.

The best form or regulation is the customer base deciding they don't like the cost of a good or service and going to a competitor.

In the end, those that never over-drafted their entire life are going to be subsidizing the check bouncers. Sound familiar? Spread the wealth (or lack there-of) around.

Bank of America is full of criminals. That bank is by far the bank we have to sue the most for trying to screw their customers to make up for their stupid investments. I don't believe anything they say. Not that this isn't true, but until other banks make that claim, I don't buy it.

I'm with Home Savings and Loan, and have my savings and 2 checking accounts with them, as well as 10 or so CDs.

I'm quite happy with them, and I know that they aren't planning on chanrging any fees for anyone in my particular situation.


It seems like anytime Congress passes a law to "help ordinary people", the "Law of unintended consequences" always supercedes the initial law. (especially in consumer protection type laws)

Oh NO!!!

Quote:

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Bank of America is full of criminals.

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One of the bajillion times my mortgage was sold off prior to the collapse, I ended up with BoA and it was the single worst experience I've ever had with a bank.

At the time, I would make mortgage payments with electronic checks over the phone. Not just once, but on two separate occasions, they ran the exact same transaction through twice - same check number, same amount - everything.... Charging me a double mortgage payment... and of course, it took them up to 30 days to reverse it.

They are absolute criminals and I will never do business with them again, even if they were the only lender available.

I had a checking account with Huntington, until they fouled up 2 transactions so badly that I could never trust them again.

I'm not sure exactly how this happened ..... but somehow I had a positive balance.

Then they took 3 check fees out.

Then they paid 2 items, which put the first and second both into the negative.

Then they charged 2 more check fees.

Then theycharged 2 more.

I called them and went off! I asked how the hell they could have check fees coming out of a positive balance. They said it was the order of the items honored. I said, "But the items honored left a positive balance, except for the fact that you took 3 fees that you should not have taken". They then ran around in circles about how they were right. I still, to this day, have no idea how you have a balance of roughly $100 .... then with only 2 items to pay, charge 3 fees, then bounce the 2 items (which were about $60 combined) , then charge 2 more fees ... twice. There were no other outstanding items, nor were there any pre-authorized charges on the account. I still, to this day, cannot understand how you take bounced check fees out to vcreate a negative balance, and then bounce items that were less than the original balance in the account .... and then charge 2 more sets of fees on top of it. I spent 2 hours on the phone with them, and at the end the supervisor said "That's all I'm going to do so I'm going to hang up with you".

Even after they refunded the "limit" of what they could refund, I was out well over $100. I told them that they better make it completely right, or I was changing banks.

They didn't, so I did.

I will NEVER do business with Huntington ever again ... as long as I live. It was idiotic, and stupid .... made no sense, and could not be explained, in person, or over the phone. They send me stuff in the mail about products and services, and I still will call them just to get my $0.02 in telling them to stop mailing me because I will never do business with them.

i've looked over the BoA offers in my area and it isn't too bad. to have free checking, you can either

1) have an account where you ONLY use online and ATM for transactions (can't go into a bank, lol)
2) get direct deposit OR maintain a $1,500 balance
3) maintain a $10,000 balance (can link with other BoA accounts for the total)
4) do certain things for the small business account

an inconvenience but it's not the end of the world. i learned recently that accounts in boston, regardless of bank, had been for fee. it's a shame that a bunch of people who didn't understand overdrafts brought us to that point but it is what it is.

I know if Bank of America.. yea, that's my bank.. if I have withdrawals and deposits on the same day they always do the withdrawals first so if something is going to bounce it will.. I understand that is not what happened to you though, they did the overdraft fees first, then the withdrawals, then more overdraft fees.

I've told my wife she should do this for a living, she would have gone to the bank for you, argued on your behalf and you probably would have ended up with your overdraft fees returned, all of them, the withdrawal money returned, no out of network ATM fees for a year, a free box of checks and a new toaster.. she's good at stuff like that

I have been a BOA customer for years. I have my checking, IRA, mortgage and my only credit card with them. I've never had a bad experience with them and am quite happy. They assigned to me, my own special banking representative, I've never needed to use them for anything but it's nice to know they are there I suppose.

I'm charged no fee for anything and get cash back on my credit card purchases, so I purchase everything with my credit card and pay it off an the end of each month. It's not a bad deal actually, so far they've paid me abut $1K to bank with them.

I got a fee a few months ago from PNC for depositing too much money on a single transaction into my business checking account! My largest client hadn't paid in a few months so it was a substantial amount, but when has a bank EVER charged for putting too much money in?!? I had it reversed, but I'm still not happy about it. I've just got so many accounts with them that the pain of changing to another bank just isn't worth it.

The other thing that really irritated me was when they switched from National City to PNC they sent every single document with all of the account and routing numbers (old to new information) in plain text through the freaking mail! Doesn't really give me a good feeling about their security protocols.

I've been with Bank of America ever since they were called Nations Bank.. Times have changed unfortunately, and now things are about to turn for the worst..

Credit Union it is.

It could also be just a simple formula with estimates plugged in ...

If you pay a teller $10.00 per hour .. and they average 15 minutes per checking account customer multiplied by the average number of visits annually .. and you might get somewhere around the 200 to 300 dollars if you add in the same "averages" that it costs to double check entries, perform operations of transfer of funds into and out of the accounts, costs of free checks, costs of maintenance of using the server and other overhead ...

it might just be how they allocate their expenses.

That and the free toaster give aways for opening a checking account .. someone has to pay for those things lol

I'm right.

And I'll leave it at that.

Keybank actually pays me interest every month into my checking acct. Granted...it isn't much but still...

If they start charging me 1 penny, i'll move it within minutes. The internet makes that pretty easy anymore.