No Free Checking for You!
News reports indicate that the days of free checking accounts being so easy to get are waning. The hard workers of America have to work a little harder to pay the fees banks are charging because they have lost the ability to loan money to College Students and in turn they have lost Millions in interest revenue, so they have to get the money back somewhere.
Why is this the case? Since new financial laws have been introduced, banks are making less money on overdraft fees. Also, the rates that banks charge merchants (interchange fees) are cutting deep into bank revenues. That leaves less cash to subsidize costs to open and maintain free checking, say financial industry experts. This is prompting many banks to add charges or extra conditions onto their checking account programs. According to Bankrate.com, the portion of checking accounts offered by banks for “free” with no monthly service charge or minimum balance, fell from 76 percent last year to 65 percent this year and are decreasing daily. If you want to find a free checking account, you will need to shop around, and will be more likely to find one at a smaller local bank or a credit union. The large banks are getting out of the free checking account business.
You do have some options. You can do more banking online, to avoid paying checking account related fees, such as ordering paper checks. You can get a prepaid debit card as well. Here’s an example of the kind of fees bigger banks are charging, from an article in the Olympian Newspaper.
“Consider Bank of America. It now charges $8.95 per month for its basic checking accounts even to those loyal customers of all these years that had a free checking account from the start. But it waives that fee when account holders meet one of three conditions: They can set up direct deposit of their payroll checks. They can bank online or at ATMs and receive their bank statements electronically, not in paper form. Or they can keep an average $1,500 balance in the account.
Your banking habits determine which account and waiver fits best. An Internet-savvy student with no paycheck might opt for the e-banking account. But someone on a salary might do better with waivers for direct deposit. Ask your bank for help, so they can keep your business, experts say.
“Free checking became a virtual commodity. That’s going to change,” said Bankrate.com senior financial analyst Greg McBride. “But it will still be available to consumers who are intent on having a free checking account.”
As a consumer, how can you limit your exposure to fees?
Again Bankrate found that while just 65 percent of checking accounts at big banks are offered free, another 23 percent become free by meeting such conditions as direct deposit. If you use direct deposit, you pay no fees at Wells Fargo, Chase and other banks/ Direct Deposit is a great way to go, and you can also do that with a prepaid Micash Mastercard card.
You might also do more online banking, since online tend to offer more free checking accounts, or even use online methods with your bricks-and-mortar bank. Prepaid cards also have ways to log in and check your balance online.
According to the article in the Olympian:
Already, prices are rising for some services linked to no-interest checking at big banks. When a minimum balance is required, it now averages $249.50, more than double the rate two years ago. And when a monthly fee is assessed, it averages $2.49, up 72 cents from last year, according to Bankrate.com.
Some experts caution there’s no such thing as a free lunch or free checking anyway. Banking analyst Ken Thomas of Miami says there’s usually a catch, like a minimum balance, or a link forged to other services that carry fees. Plus, the time it takes to shut an existing account and open a “free” one in our security-intensive world, “sometimes is just not worth the free checking,” said Thomas.
So the bottom line: shop around and we have the perfect solution for you:
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