Free checking: a service one expects to see when opening a bank account.
However, the financial regulation bill recently passed by Congress could send banks back to the days of monthly fees to make up for lost revenue.
"[Banks] are trying to make sure they're covering all the costs, especially with the services they're providing," said James Barth, professor of finance. "So some banks have pulled back and realized they have to start charging for more services that they didn't previously used to charge for."
According to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which took effect Aug. 15, banks are now limited from charging overdraft fees, a move meant to curb a rise in lawsuits from consumers being charged multiple times in amounts far exceeding the actual purchases.
Barth, a Senior Finance Fellow at the economic think tank Milken Institute, said that overdraft fees allowed banks to collect money from risky practices while saving money for the general customer.
"First and foremost, banks are out to earn a profit... and the way they do it is charging for their services," Barth said. "So, by and large, banks try to charge for their services based on what they perceive to be the riskiness of those services being offered. What banks sometimes do is they charge less for one service and try to make up that lower price by charging a higher price on another service."
Some banks have already ended universal free checking, such as Wells Fargo, which added a $5 monthly fee to all new accounts after July 1.
That change, however, comes not from a response to financial reform, but a restructuring following the merger of Wells Fargo and Wachovia.
"At the same time we're merging the branches together, we're implementing all the new rules," said Vivian Autry, senior vice president of treasury sales management at Wells Fargo. "A lot of the things Wells Fargo did are things Wachovia didn't do... That's why [the regulation] won't affect us that much. We already had a lot of those policies in place ahead of time."
Some believe the cries over the end of free checking are greatly exaggerated. Every bank that does not offer free checking offers ways to qualify for it, according to Autry.
BBVA Compass bases its fees on a set of seven services, such as waiving the fee for using another bank's ATM.
Each customer can choose two services for free, and each additional option adds $2 a month.
Both Wells Fargo and Regions waive their fees if customers sign up for direct deposit with their employers, or if they maintain minimum balances.
Regions waives its fee if customers keep an average of $500 per month, while Wells Fargo sets an average daily balance of $1,500.
Both banks also offer free checking opportunities for college students.
"Some of the banks, particularly those near colleges and universities, may charge students next to nothing, if anything at all, on a checking account," Barth said. "In part, they assume that if a student hooks up with one particular bank, they may stay with that bank after they graduate and get a job."
Still, smaller national banks and local firms continue to offer free checking with no strings attached.
RBC, Charter Bank, BB&T and Keystone have free checking accounts, the only qualification being a minimum opening deposit.
"When we first opened up, we gained a lot of business just because people were tired of the larger banks changing hands so many times," said Leslie Fussell, assistant branch manager at Keystone Bank. "If we get more because of this, then we'd certainly be grateful for it, but I don't know how much we could count on it."
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