Free checking may soon be extinct
Since the passage of recent credit card regulations by the Federal Reserve Board and Congress, consumers have seen a number of fees and charges disappear from their credit card accounts. However, because of these changes industry experts predict one popular banking product may disappear along with them.
In recent weeks, Bank of America, Wells Fargo, JP Morgan Chase and Citibank have already cut free checking accounts for new customers. This means consumers who are unable to hold a high minimum monthly balance may end up paying $100 a year in extra charges.
"Wealthy consumers will be able to avoid these charges by maintaining high balances," Jeremy Rosenblum, a Philadelphia lawyer and consumer finance specialist, told The Lost Angeles Times. "But for the poor and moderate-income people whose balances are lower, it's going to be much harder to avoid these fees."
Industry officials estimate it costs account providers $300 to $350 to maintain free checking services for customers. This includes paying for branches, ATMs and customer service, according to the report.
Currently the banks are testing $9 to $25 monthly fees on new accounts. However, consumer who want to avoid these charges may consider switching to a local bank or credit union, as many still offer free services.