COMMENTARY| The Week reports that only 39 percent of checking accounts in America today are truly free -- meaning that they do not require a minimum balance, and do not come tethered with a monthly fee. However, 39 percent is hardly a good number considering how many free checking options were available just three years ago. Free checking accounts used to make up over 76 percent of the consumer banking market as of 2009. What happened between 2009 and now? Is free checking on the verge of extinction? It might be.
The Politics of Money
New regulations like Dodd-Frank, coupled with a stagnant economy hurt bank profits. President Obama's 2010 overhaul of the financial industry hindered banking institutions from charging overdraft fees, further cutting into their revenue. Now, banks are looking to make up losses anyway they can, and the best way for many of these banks to do this is to charge consumers for their checking accounts.
The Heat is On
Bank of America plans to charge customers $9 to $25 a month just to have a checking account with them. Wells Fargo and JPMorgan Chase aren't far behind, and are also considering implementing monthly banking fees. If I were to keep my Chase account open and active, I would pay $108 to $300 a year, depending on the monthly fee my banks settles on. Paying a bank to do little more than hold on to the money I use to pay bills doesn't much appeal to me.
One of the Few Switching
Yet, I am one of the few. The Wall Street Journal doesn't think that the banks are making a big gamble by imposing new monthly checking account fees. In fact, studies have shown most people would rather pay to stay than uproot their entire financial lives, giving banks plenty of leverage to hike up the charges. However, having seen the writing on the wall from the day Dodd-Frank came on the scene, I opted to go with a truly free checking account using the services of a local credit union.
And even though my removal of my one account from larger banking institutions certainly won't bankrupt them, I also won't be paying a few hundred dollars a year just for a bank to hold on to my money. I went where free checking remains (at least for today) free, and can only hope that it stays that way.
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