The end of free checking accounts?

An increasing number of banks are adding more — and higher — fees to checking accounts in response to the CARD Act, which was rolled out last year. The Rules banned a handful of fees, including certain overdraft and excessive late charges. Others prevent over-the-top interest rate hikes. Most recently, the Federal Reserve proposed a cap on debit interchange fees — what the bank charges retailers when customers swipe their cards.  So is free checking a thing of the past or is it still available? 

“Free checking is going to become less prevalent, but it’s not going to go away like the dinosaurs,” said Greg McBride, a senior financial analyst at Bankrate.com.  In fact, he added, about 65% of financial institutions still offer free checking, while 23% offer an account where fees can be waived with actions such as direct deposits. “The upshot for consumers is that what will become more prevalent is the ability to avoid fees with certain options that best suit their needs, like direct deposit, using online statements or having aggregate balances with banks,” McBride said.

If you bank with a mega bank here is what they are up to.   

Bank of America: 

Currently, Bank of America  charges an $8.95 monthly maintenance fees on most checking accounts. But customers could get those charges waived if they make at least one direct payment each month or maintain a balance of $1,500.

Starting at the end of the year, that will all change. If you want a basic checking account where you don’t have to worry about keeping up balances of making minimum deposits, you’re going to pay a $9 monthly fee. No way around it.

Can’t stand the idea of paying a fee? You’ll have to enroll in “enhanced” checking and keep a balance of $5,000 in your total linked deposit accounts –which includes checking, saving and investment accounts. Or you can deposit at least $2,000 monthly, or use a linked credit card at least once a month. If your balance drops below $5,000 or you don’t meet the other requirements, you’re charged a $15 fee.

Wells Fargo: Wells Fargo ended its “free checking” account in July and now hits customers with $5 monthly fee unless they maintain a minimum balance of $1,500 or make monthly deposits of $250.

Its other accounts charge fees up to $30, but they can be waived if you meet certain requirements, like maintaining higher minimum balances or making automatic transfers to your savings account. That means every account at Wells Fargo offers a way to waive a fee.

So where can you find fee checking without strings attached?  Look outside the mega banks.   While you can find ways around monthly fees at most of the nation’s biggest banks, many smaller community banks, credit unions and online banks offer free checking without the strings attached.

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