Are we about to see the end of free checking? There are indications that free checking may be on the way out. With overdraft fees capped in the U.S. by a recent bit of financial reform legislation, banks are looking for ways to keep the revenue coming in. One of those ways to take free checking accounts and start adding fees. Last year, one of my banks accounts announced $9 monthly fee on my checking account if I didn’t maintain a certain balance. Since I had only opened the account because it was required to get a high yield savings account, I pulled all my money out and closed both accounts.
Photo: Tammara
My experience isn’t abnormal, though. The New York Times cites a study from Bankrate.com that found that the number of free checking accounts without minimum balances or service fees has been declining. Not only that, but the required minimum is rising, according to the survey information cited by the New York Times:
In addition, according to the study, minimum required average balances and monthly service fees for noninterest accounts are up from last year. According to Bankrate.com, the minimum average balance required to avoid monthly fees for a noninterest checking account is now $249.50, up from $185.75 in last year’s survey and $109.26 in 2008.
This is for a noninterest checking account. Banks aren’t even paying you interest, and still charging fees in some cases. Other banks, like Bank of America, are testing out tiered accounts that would provide you with a chance to avoid fees by maintaining a certain account balance or engaging in a certain number of transactions. Accounts with no minimum balance and no transaction requirements, like what we have now in free checking, would come with monthly service fees.
What You Can Do to Continue to Receive Free Checking
Most free checking accounts are still truly free, even though a disturbing trend seems to be forming. If you want to continue to receive free checking, and you don’t want to have to worry about maintaining a minimum balance or counting the transactions you make each month, you do have some options:
- Go Online: Many online banks still offer truly free checking accounts. Additionally, some major banks offer online bank accounts that come without paper statements. However, you may have to pay a fee if you come to the branch to bank with a teller more than a couple times a month.
- Bank Local: Instead of relying on a big national bank, you can consider your local bank or credit union. Many of these financial institutions offer free checking accounts — no strings attached. Check to see what sort of ATM or bank coop the local institution belongs to if you are concerned about access your account while on the road.
- Special Accounts: Student checking accounts and senior checking accounts still have special features that usually mean truly free checking. As long as you meet the eligibility requirements, you should be in reasonably good shape.
You can show your displeasure with the new state of things. If you aren’t happy with what your current bank is offering, there is a good chance you can find something better elsewhere.
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Here in Canada we have several online banks that offer free checking accounts. Also we have PC financial that offers free checking AND works with one of our major banks ATMs. As long as you don’t need full service this is probably your best choice.
Miranda,
We appreciate you writing about free checking and hope you continue doing so. If you need any information about free checking, please check out our site dedicated to keeping free checking alive at http://freecheckinginformation.com – This site is not affiliated with any bank, credit union, or marketing agency.
I’ve heard the old saying “90% of your business comes from 10% of your business”. I once worked at Bank of America and had a hard time with atleast one customer every day with regards to overdraft fees or checking account fees. Most of the time these people had very little in their checking account, living paycheck to paycheck or had a long history of mismanaging their funds. When BOA first changed their accounts and added higher fees I was a bit upset b/c I knew that would mean more time for me in customer service and less time focusing on sales. I’ve since changed my mind b/c if I owned a bank (far from it) and wanted to offer checking accounts to the public…I would have an ideal customer in mind, one that keeps a large balance and requires less maintenance. In that regard I get what they are trying to do. I saw customers time and time again walk out angry becuase they knew they could get free checking down the street and didn’t want to keep a large balance ($750 at the time) or transfer money to a savings account on a monthly basis. But come on…if you can’t transfer money to a savings account each month of atleast $25 bucks or keep $750 in a checking account then you have a bigger problem to tackle and the bank knows it, which is why they’d prefer to offer their business to someone who can. Bottom line – if you can’t keep the minimum balance in a checking account to qualify for free checking then you may want to ask yourself why that is?
I meant “90% of your business comes from 10% of your clients”. My bad for that typo, currently at work right now and trying to do too much at once. Great blog by the way!
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