The Dodd-Frank financial regulations have increased banks’ costs, and one result seems to be that free checking is going away. The Wall Street Journal has the details of a new survey by Bankrate Inc.:
To avoid a monthly fee, bank customers in the U.S. must keep an average minimum balance of $723 in checking accounts that pay no interest—up 23% over last year, according to a new survey from data provider Bankrate Inc., which analyzed 477 checking accounts at 247 banks and thrifts. The average monthly fee on noninterest checking accounts rose 25% to $5.48, also a record. […]
The fees come as the banking industry looks to lose more than $10 billion a year in revenue through federal restrictions on debit cards and overdraft policies, according to bank consultants. […]
Banks began imposing fees for checking accounts in the early 1980s to offset higher interest rates paid on savings accounts. The trend reversed in the late 1980s, when small banks began wooing customers with free checking. Other banks followed, and free checking became standard by the late 1990s.
Not any longer. The Bankrate survey found that 39% of noninterest checking accounts are free to all customers, down from 45% in 2011 and a peak of 76% in 2009. [Wall Street Journal, September 24]
It doesn’t help that the Federal Reserve has pushed interest rates so low that having a bank account earns you next to zero interest.