Money & Finance

Free checking accounts for millions of bank customers may soon be obsolete as big banks begin charging checking accounts that don’t meet certain criteria.

Due to changes to the banking industry, like the end of overdraft fees starting July 1, and a shift towards “consumer protections” thanks to up-and-coming financial reform legislation and recent CARD Act reforms, banks are under pressure to make more money. Faced with tighter margins and billions of dollars in lost revenue, charging checking account customers are a profitable opportunity for banks.

Some bank customers are already feeling the burn. The Wall Street Journal reports that HSBC North America checking account customers will soon be subject to a monthly maintenance fee of up to $15, Wells Fargo is eliminating free checking on July 1st, and the nation’s largest bank, Bank of America, is already testing a fee structure on new tiered checking accounts.

Here are a few more things free checking account customers could get burned on:

1. Maintenance fees. Especially for basic accounts that don’t generate much banking activity, customers may have to meet multiple requirements like a minimum balance, certain amount of debit card transactions a month, or use banking services to avoid this fee.
2. A tiered pricing structure. Bank of America’s new pricing model places a flat monthly fee on all customers, and is priced according to different tiers of banking activity. This is meant to encourage customers to bank more and use other banking services.
3. More debit fees. Customers must reach a minimum number of debit card transactions a month to avoid this fee, which encourages customers to engage with their account more.
4. Minimum deposit increase. Banks could raise the minimum deposit requirement to encourage people to deposit more money when opening an account.
5. Rewards and high interest. This could be the end of your rewards checking and high-interest checking if you don’t pay a fee or can’t meet steeper requirements.

What can consumers do now? Those who will suffer the most are consumers who keep low balances, do not bank often, and manage their accounts responsibly to dodge penalty fees. Here are some steps you can take to ditch impending checking account fees:

1. Shop around. Other banks’ requirements might fit your financial lifestyle better, such as a lower minimum balance or certain number of debit card transactions, so you can avoid the fees or at least pay for services you actually use and benefit from.
2. Go online. Many online banks may maintain free checking accounts, offer high interest rates, and have fewer strings attached when it comes to requirements.
3. Go local. Head-to-head with big banks, credit unions are often praised for lower fees, lower rates, personalized service, and less stringent charges. Many will likely hold on to free checking accounts despite industry changes.
4. Do a lot of business with one bank. When you have multiple financial relationships with one bank, like a mortgage, loan, credit card, and checking account, banks tend to give the best deals to those customers and be more likely to waive fees.
5. Shift money from savings account to checking account. If your biggest hang-up is meeting the minimum balance to qualify for free checking, you can move some money from your savings account to checking. Look for high-yield checking accounts to give you interest rates as generous as many savings accounts.

The end of free checking accounts may be coming to your own bank, so look out for mailed notices warning you of impending changes to your checking account. If you have a long-standing relationship with your bank, try disputing the new fees on your account and the bank might just listen. This is a time of experimenting and testing for many big banks, so a little persistent complaining might do the trick.

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