Costly consumer protections prompt big banks to add fees to checking accounts
May 25, 2011
Banks are waging a fresh new assault on your checking account this month with a flurry of new or increased fees.
The new charges are a reaction to new federal consumer-protection regulations on credit cards, debit cards and overdraft charges that are costing U.S. banks billions of dollars. Banks used the income from swipe fees, credit card penalties and bounced check fees to offset the estimated $250 to $300 a year it costs them to provide you with a checking account.
Banks get creative with checking account fees
But with new and pending restrictions on some bank practices that regulators felt were deceptive and excessive, big banks are rolling out charges for dozens transactions and products that many of us take for granted as free services. Among the new fees:
- Bank of America is increasing the month fee for its MyAccess checking account from $8.95 to $12, unless customers keep at least $1,500 in their account of set up a direct deposit of at least $250.
- Bank of America will start charging a $35 overdraft fee when your account goes into the red by even one penny. Previously, the overdraft charge didn't kick in until you were $10 or more in the red.
- Chase Bank has increased fees for overdraft transfers, outgoing wire transfers and stopped payments on checks. It is also doubling the monthly charge to new customers for a checking account to $12.
- Chase will also be adding a $1 ATM charge to get an account balance statement and ending its debit card rewards programs.
Banks losing customers, but not money
According to the Gannett News Service, big banks are expected to lose 13 million checking accounts around the country by the end of 2011. Illinois economist Michael Moebs told Gannett that the big banks' share of the nation's 130 million consumer checking accounts should drop from 45 percent to 35 percent by the beginning of 2012.
Since banks don't make money off these accounts and may in some cases lose money servicing these customers, they apparently don't mind if the consumers flee to an online checking account or to small banks and credit unions still offering free checking accounts.
Some banks will provide free checking if you also have money market accounts, a savings account or some other kind of investment with the bank.
Nearly 50 checking account fees are typical
The banks' latest round of charges include a number that are not as obvious as monthly checking fees. According to a recent study by Pew Charitable Trusts, U.S. banks have a median 49 fees. For instance:
- PNC Bank will start charging customers $32.50 to replace lost debit cards.
- U.S. Bank will charge you $5 if they send you a paper statement and it gets returned in the mail because of an incorrect address.
- Bank of America will charge its e-banking customers $8.95 every time they use a teller or drive-up window or night deposit box to make a transaction.
- A bank in Illinois was charging kids 5 percent when they came in to deposit the coins in their piggy bank. The bank said it was dropping the practice after the Wall Street Journal called to verify the cost.
