End Is Seen to Free Checking

[Newsjock]

Source: 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 is expected 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.

... 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.


Read more: http://online.wsj.com/article/SB10001424052748703513604575311093932315142.html?mod=rss_Today's_Most_Popular

[snot]

1. Glad I moved from a big bank to a credit union last year.

[Dappleganger]

5. Exactly.

It's hard for them to know how to research the right places to go, then do the paperwork to get it changed over.

[Captain Hilts]

2. Pay to use your own money....nt

[superconnected]

14. If it's your checking account, you are paying with your own money.

[anigbrowl]

22. You can always put it under the mattress

I don't mind paying a small, reasonable fee for the security and convenience of banking facilities. By 'reasonable' I mean enough that the bank's profit on such services is at some margin of 10% and they deliver value for money.

It is possible to have healthy competition in retail banking and still make a profit. The big players just got real greedy and lazy over the last decade in particular.

[jwirr]

3. That will mostly hurt the elderly and the disabled. Bastards.

[saigon68]

15. Yes they are "TOO BIG TO FAIL"

[pitohui]

33. nah seniors get free checking anyways

or at least in my area they do

also if people would READ before they post, the article is talking about INTEREST CHECKING accts, considering the interest rate is practically nothing, it makes more sense to have a true "free" checking account -- you don't pay a fee nor do they pay you interest, i have several of these, and i make my money not from interest, they pay none, but from various promotions, for instance, this month, capital one is giving me $20 to use my debit card twice

if you want to earn interest, get a savings acct at a reputable savings bank like ingdirect.com or get a good CD at your local bank, but interest rates are pretty shitty now even if you're aggressive abt following promotions, so don't expect much

it's just silly and has been for awhile to have an INTEREST checking acct, they've ALWAYS had high (such as $1,500 minimum) balances

[Hosnon]

4. Credit unions it is then. nt.

[tomm2thumbs]

7. +1000 - the real 'public option' for the banking industry

[defendandprotect]

39. yes . . . I've moved some of my stuff on to credit unions... but their rates are also dropping...

never checked their checking deals -- but will now --

[ejpoeta]

6. husband found that out when he got his statement the other day

got charged $7 for balance being too low.new rule. this after he just paid $12 to replace lost card. needless to say we will take our money elsewhere. it was an account bob opened to save money having it direct deposited and not using it. he already has a federal credit union account and i have one at m&T. at least bob gets dividends from the credit union. better to put our savings in a place like that anyway.

[zipplewrath]

8. Already true

Free checking tends to come and go. Minimum balances and maximum check counts have been around for decades. Truth is, in the long run, the definition of "free" needs some refinement. I pay no fees, and basically have unlimited check writing capability, but I have to buy the checks, and I receive no interest on the deposits. Now, in this day of on line banking, I'm not actually writing many checks, so I'm not buying many either. And since a checking account is really a "cash flow" account, I'm not missing alot of interest. Some banks will wave fees for retirees who maintain a savings account, or buy a CD.

[David__77]

9. I'll stick with my credit union anyway.

Banks? Never.

[louis-t]

10. Already paying $12 month at BoA.

It's like they punish us when they screw up.

[CreekDog]

17. Why does anybody stick with BofA?

Everytime this comes up, I ask the question.

Years ago, I realized they had whole departments of people thinking of ways to get a fee out of me where there had been none before.

Previously I had overdraft linked to my savings, then they said I couldn't link it to savings --only a credit card. This change I discovered, in my poorer days, meant that I still paid the same overdraft fee as before, but also paid a cash advance fee from my credit card AND the cash advance interest rate on my credit card.

I walked. The credit union down the street from work which had my modest savings account has since then had my checking account with minimal fees, no minimum balance crap and so forth.

And with BofA, it's not like my fees were paying for the service they were providing me --those fees were paying for them to gamble in the stock market.

:grr:

I particularly hate BofA, though I have little respect for the bankster/gambler approach anyway and tend to keep arms length from them to the extent I can.

[GreenStormCloud]

21. I have been with BofA for about 8 years with no problems. N/T

[CreekDog]

26. bullshit

Bank of America bail-out agreed

Bank of America will receive $20bn (£13.4bn) in fresh US government aid and $118bn worth of guarantees against bad assets.

The emergency funding will help the troubled bank - the US's largest - absorb the losses it incurred when it bought Merrill Lynch.

In return for the money, the US Treasury will take a stake in the bank.

Just hours after the aid package was announced, Merrill Lynch posted a fourth-quarter 2008 loss of $15.31bn.

Bank of America reported a loss of $1.7bn, compared with a profit of $268m for the same period a year earlier.

Bank of America had been seen as one of the strongest US banks, at least until its decision to take over Merrill.

"They were probably one of the best banks out there, balance sheet-wise, until they did the Merrill deal," said Cassandra Toroian at Bell Rock Capital.

http://news.bbc.co.uk/2/hi/7832484.stm

[GreenStormCloud]

29. So far, I have not had any difficulties. N/T

[CreekDog]

30. yes you have

how many ways do we have to explain to you?

unless you don't think the bailout was a difficulty for you (like an economic implosion isn't?).

[totodeinhere]

43. He probably means he has had no difficulties with his own account.

He probably was not referring to the collective difficulties that we all share that you pointed out.

[CreekDog]

44. obviously --and he's being obtuse about it

sort of like flying a broken airline but not having any complaints because the flight attendant delivered your drinks okay.

[GreenStormCloud]

48. If the airplane gets there on time and lands safely would be a more valid comparison.

So far, with BoA, my accounts have not crashed and burned. Your drink analogy is mere snark.

[CreekDog]

52. and your remarks...

[pitohui]

34. $12 a month for a checking acct is a BIG problem

one of the first things i did when assisting a friend out of work was to close his BOA acct -- which charged him $12 a month for a checking acct -- and switch him to capital one, where he has a free acct and does not have to maintain a min balance

if you are wealthy it's one thing to throw $12 in the garbage each & every month but when you're having trouble meeting your bills you need to stop paying for NOTHING, don't stick cash into the hands of every beggar w. his handout esp. a rich beggar like BOA

i will say he liked BOA and their service but he likes cap one and their service just as well, it's EXACTLY the same, except now he keeps the $12 to pay off more urgent items

[GreenStormCloud]

50. I am not paying $12 a month. In fact, our BofA accounts are free. N/T

[Romulox]

11. Say it with me: THERE IS NO SUCH THING AS A FREE LUNCH.

It is much better to pay the actual price for the service at the time of service. Rolling costs/prices together (think new cell phone pricing with a 2 year commitment) is done to confuse consumers.

[starroute]

18. What service?

You're basically handing somebody else your money to do with whatever they want until you ask for it back. They're supposed to be investing and otherwise making productive uses of it that will cover the relatively small processing costs of your checks and deposits and still give them a profit.

I could maybe see charging modest fees if you go over a certain number of transactions a month -- and I believe there are account types that do just that. But what excuse is there for charging someone who, say, maintains an average balance of $1000 while making three deposits and writing half a dozen checks each month?

Acting as though banks are providing us a "service" by storing our money for us is simply disingenuous.

[GreenStormCloud]

24. What about someone who writes 75 checks a month and...

...whose balance drops to under $5 about twice a month? Back before modern online banking, that is about what my bank statement looked like. I still have lots of transactions per month, but they are with online payments and debit card payments. I only write actual paper checks about two to five times a month.

[Romulox]

40. Lame.

It's dumb to put words in my mouth and demolish them--it's called a "strawman argument".

If you want to quibble about the value of a checking account, call your banker; if you want to quibble about the definition of "service", call Merriam Webster (you might look up "disingenuous" while you're there.) :hi:

[jayfish]

19. There's also no such thing a guaranteed profit margin.

They are already profiting from the money you have stored in you account. Maybe when they disclose the actual price of their service they can do the same for the interest they are making off of our money.

FSH

[Romulox]

41. I would love to know what griping about your bank has to do with my post.

I was simply pointing out that there is no such thing as a "free" service from a for-profit concern. Where you get that I am defender of bankers from this is beyond me. :eyes:

[CatWoman]

12. To those who voiced the sentiment

credit unions are definitely the way to go.

[Uncle Joe]

13. When that happens, I'm closing my bank account.

Thanks for the thread, Newsjock.

[GreenStormCloud]

28. Real world. How will you transact business?

To pay a bill, if you don't have a checking account, you will have to get a money order (Cost about $1.00)and mail the payment. (Cost of stamp - $.43.) So you will pay about a dollar an a half for each mailed transaction.

Even with the fees, a checking account will be far cheaper.

[Uncle Joe]

32. Through the credit union.

The credit union is superior in regards to cost, but not as convenient, however if my bank starts up with check fees, I will close that account and operate solely through the credit union.

[pitohui]

35. clearly, greenstormcloud didn't read before making multiple posts

to pay a bill you will not have to get a money order

you will simply have to get a FREE checking account that doesn't pay interest -- the article's focus is on big banks that charge this fee for INTEREST-BEARING checking accounts

big banks DO have free checking acct services, they just ain't gonna pay you interest on them, silly

when reading propaganda and scare stories, READ CAREFULLY or not at all -- this is meant to be a scare story but it is just the usual wall street journal big overstated lie, the alternative to expensive interest-bearing checking accounts are one of the many, many FREE non-interest-bearing checking accounts that you will find at many banks and credit unions all over this nation

sheeh

i'm sorry you have been duped for many years to pay $12 a month for nothing at BOA, but at some point, YOU have to take the blame for being a poor consumer and a dupe, i have not paid to have a checking account since 1980 and at this time i'm holding MULTIPLE checking accounts for various purposes (usually because I'M coming out financially to hold them, such an account with a bank in texas that is giving me airline miles each month, or some of my local banks, which have given me multiple $$$ in promotions to keep the accounts)

[closeupready]

38. You still need a stamp (.43) if you mail a paper check. Money orders aren't $1.00 each

nowhere near that. More like .15.

[Trillo]

16. "user fees" are considered regressive when they're applied equally to everyone.

"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."

richer folks will be given freebies, whereas poorer folks won't get them? Why not charge higher fees for higher balances?

(my questions are rhetorical)

Poor folks are continually being nickel-and-dimed.

[Gormy Cuss]

25. Because banks want customers with more money to park in those accounts

and they don't want small balance customers. It's been that way for a long time. The bigger the bank, the less likely it is that they want small balance accounts.

All of the banks that are "too big to fail" use this playbook, and they became too big to fail by eating up smaller banks that built themselves in part by taking on small balance customers.

Small, local savings banks and credit unions are the best bets for people who can't keep much in an account.

[GreenStormCloud]

27. It takes just as much account for a tiny account as for a large account.

The amount of labor involved is about the same, but the larger account has a bigger base to spread the costs over. Economies of scale apply in banking just as they do in manufacturing.

[SoCalDem]

20. Clever.

This will rile up people & get them to write angry letters complaining about how those "g-d regulations" are costing them their free checking..

It's a genius marketing plan.. make the "small people" look over there..while the banks rob us all blind with their big-bucks schemes & bankrupt the nation every 10-15 years..

[GreenStormCloud]

23. Nothing new there.

In 1969, when I opened my first checking account, I had to buy my own checks and was charged ten cents for each check that I wrote. In 1969 ten cents would buy a canned soft drink from a vending machine. Today that would be over a dollar for the drink.

Eventually I would get the canceled check back with the bank statement and have to balance it, without the aid of a calculator or a computer. If I wanted to prove that I had paid a particular bill I had to find the canceled check. That meant that I had to file and keep them for years.

Remember that each time you write a check, it has to be handled several times. That takes employees who need to be paid.

Since many business were careful about what checks they took, I often had to carry cash on me when shopping.

Banks opened at 10AM and closed at 2PM, because they needed the rest of the day, both morning and afternoon, to do their accounting for that day.

Now, instead of all of those checks, I am able to pay many of my bills online. No one has to handle any paper, and the bank stores the transaction forever. No payments get lost in the mail. The debit card serves nicely for going to stores where I would have once written checks. I can, and do, check my bank accounts daily and balance them daily, online. Takes only about a minute or two. I think I write between two to five actual paper checks a month now. Back then I would write about 60 checks a month.

So if I have to start paying $5 per account, it will be far, far cheaper (Adjusted for inflation) than bank charges were in 1969, and the service is enormously better than then.

[Gormy Cuss]

53. Five years later, when I opened my first checking account, there was no monthly fee, no charge per

check and no minimum balance. There was a fee to buy the blank checks. The banks were open from 9AM to 5PM five days a week. This held true for all subsequent accounts in other banks in the Northeast. It took some work to find such accounts at times and sometimes I was required to open a companion savings account.

So if I'm told that there will be a monthly fee on my checking account I'll close it and move it to another institution.

[Evasporque]

31. it never was free....they just charge you more in fees behind the scenes...nt

[defendandprotect]

37. True -- and then they've also lost their big scam . . . OVERDRAFT CHARGES ....

which the government finally slapped some new regulation on --

big money maker while they had it going!!

[GreenStormCloud]

49. And easy to avoid. Don't write checks for money you don't have.

Amazing how the obvious solutions are so completely ignored.

[defendandprotect]

36. If banks do this I'll be moving the rest of my stuff to a credit union . . . !!!

[totodeinhere]

42. Those selfish SOB's. Trying to squeeze every last dime out of us that they can. n/t

[Lou Jones]

45. Good for Bank of America

If Americans are too stupid or lazy to switch to credit unions, they deserve to pay more. Good job, big banks, on taking advantage of human stupidity. We know you'll keep up the good work.

[Art_from_Ark]

46. Some places don't have credit unions

My hometown doesn't. There are several banks, though, all of which are regional or very local. Since they are all essentially local and competing with one another, they have to provide better service.

[shanti]

47. I loooooove my credit union

:)

[ProudDad]

51. NOT at my Credit Union!

Move your MONEY!!!

http://moveyourmoney.info/

Move it to a LOCAL Credit Union...!!!

Starve the capitalist beast while improving your local community!