Whatever Happened to Free Checking?

What do you notice when you open your bank statement these days?


More than likely, one of the first things you notice is the free checking account you signed up for is anything but. Free has been replaced with fee, and it’s a trend that is expected to continue.


Free checking has reached endangered status at US banks. In a survey released in late 2012, Bankrate found just 39% of banks offering a checking account with no minimum balance and no monthly fee, which is the industry definition of a free checking.


To put that into context, 45% of banks offered those types of accounts in 2011, while 79% did in 2009.


Those who follow the banking industry see even fewer free accounts, and more fees, on the horizon. Some of the fees that are showing up on bank statements these days include:

-  Monthly maintenance fee. Fail to meet a minimum balance and you face a monthly fee.

Human teller fees. Using your account online or at ATMs is free, but if you need a teller, a fee is charged.

Returned mail fee. Consumers get dinged when bank envelopes, such as an account notice, are returned to them.

Charges for redeeming rewards points. Some banks are starting to charge customers who redeem credit or debit card rewards points.

Early account closure fees. Banks began imposing these fees as an obstacle, after people began moving their accounts.

Cash deposit fees. Some big banks are charging customers who deposit lots of cash.


Paying fees can cost an account holder more than $150 a year in just monthly maintenance fees, according to the Bankrate data.


As larger banks face more regulation, low interest rates and declining lending, fees have become an important source of revenue. But consumers are taking notice, and the same Bankrate poll found that 72% of consumers would consider switching banks because of increased fees.


There are options.


Many community banks such as FNB-Fox Valley still offer free checking accounts, with all of the service and products promised by larger banks.


FNB-Fox Valley offers FREEdomFirst checking, a classic free checking account with no minimum balance and no monthly maintenance fee. The bank also has a checking option that pays interest, ADDvantageFirst Checking, though it does require a minimum balance to avoid a monthly maintenance fee.


While consumers have expressed frustration at rising bank fees, they have also shown a reluctance to move their money to banks that don’t charge fees. The old saying that change is hard certainly applies when trying to move your account from one of the big banks to a community bank.


Consumers can often feel locked in by services such as direct deposits and automatic payments. Rerouting those payments and deposits into a new account can take as much as four to six weeks. Who has the money to maintain two accounts for that long while the switch is complete?


Again, many smaller community banks are putting together programs to help you make that switch. FNB-Fox Valley recently introduced its Switch Assistant program, which features personal and business bankers dedicated to helping you move your account from another bank to FNB-Fox Valley.


Not only will these switch assistants explain the process, they will help manage the transition so you don’t miss any steps and wind up paying even more in fees.


To paraphrase a recent commercial: you shouldn’t have to pay to use your own money.