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Free checking accounts slowly becoming history

The latest MoneyRates.com Bank Survey shows that free checking accounts are slowly fading away as customers face a plethora of new checking account fees and restrictions.

From monthly maintenance fees and minimum balance requirements to overdraft and ATM fees, new federal regulations are forcing banks to scramble for ways to recoup lost revenue.

Many of the new rules have only recently been implemented or are still being written, however, the percentage of free checking accounts in the survey has already shrunk since an earlier report in January 2011.  

Banks that were surveyed are now charging monthly maintenance fees at an average of $11.75, which works out to $141 per year.

The survey also found that the average total fee for using a non-affiliated ATM rose from $3.06 in January to $3.22 in July, driven by an increase in the portion of the fee charged by the ATM-operating bank.

The average overdraft fee remains nearly unchanged from January’s survey at $28.85.

A majority of these new rules were passed in last year’s financial overhaul legislation. The law included an amendment known as the Durbin Amendment that only recently won approval. The financial industry warned that the amendment, which drastically cut their interchange revenue stream, would cause them to slash benefits such as free checking accounts and to impose new fees.

Sen. Dick Durbin (D-Ill.), the champion of the measure, scoffed at that argument.

“Hasn't anyone ever realized that threatening higher consumer fees is a great strategy to scare away any efforts at reform?” Durbin asked on the Senate floor in March. “It is a great tactic because it is all speculation. We cannot prove or disprove for sure what is going to happen in the future.”

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