'Free' Checking Costs More

Wall Street Journal
September 24, 2012
Sidel, Robin
P. A1

Checking accounts that are marketed as "free" have become increasingly expensive as banks seek new revenues. U.S. bank customers must maintain an average minimum balance of $723 to avoid a monthly fee for checking accounts that pay no interest. This average is up 23 percent over last year, according to data provider Bankrate Inc., which analyzed 477 checking accounts at 247 financial institutions. Monthly fees for noninterest checking accounts, meanwhile, increased 25 percent to an average of $5.48. Other fees and rate increases include for use of ATMs and penalties for account overdrafts. Among the institutions hiking costs is SunTrust, which now has a $36 fee on all overdrafts for basic checking accounts -- a change from the previous policy, which charged $25 for the first overdraft and $36 for each subsequent payment. And Wells Fargo recently decided to phase out the last of its free checking accounts, now requiring customers in five regional markets to maintain a balance of $1,500 or make $500 in direct deposits each month to avoid a $7 monthly fee. The changes are coming as banks face losses of more than $10 billion a year in revenue due to new federal restrictions on debit cards and overdraft policies, consultants say. Free checking was a standard for banks by the late 1990s; but now only 39 percent of noninterest checking accounts are free to all customers, down from 45 percent last year, the Bankrate survey found.
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