In recent news, most banks offer free checking if customers have their paycheck direct deposited or maintain an average minimum balance. According to a 2023 Bankrate.com survey, 73% of people with checking accounts take advantage of this option.
However, there may be changes in store for free checking services. Marianne Lake, head of Chase Bank, recently stated to the Wall Street Journal that Chase may stop offering free checking and other free banking services if regulatory costs increase for banks.
Financial services analyst Jaret Seiberg explained, “Consumer banking is predicated on banks providing services for free to consumers such as checking accounts, debit cards and electronic bill paying.”
The Consumer Financial Protection Bureau has finalized a rule capping credit card late fees at $8, and has proposed limiting how much banks can charge customers in overdraft fees. The Federal Reserve is also expected to further limit how much banks can charge merchants for debit card transactions.
While banks may still have to offer incentives to attract customers, consumer advocate Adam Rust believes that customers may not immediately switch banks if fees are imposed on checking accounts. Rust noted that the average American has held the same checking account for nearly 18 years, longer than the median duration of a first marriage.
Rust also highlighted that switching banks can be a hassle due to automated bill payment options. With numerous service providers tied to a bank account, switching banks would require manually updating payment information for each provider.
Overall, Rust suggests that paying a modest fee for a checking account isn’t necessarily a bad thing, especially if it leads to more transparent pricing and limits on other fees like overdraft charges. The average overdraft fee was close to $27 last year, with some banks charging as much as $38.
Despite potential changes to free checking options, some banks may choose to retain this service due to pushback from customers or legal challenges. Additionally, regulatory changes in the past have led to lower costs for consumers and increased availability of credit, indicating that there may be a way to balance consumer interests and bank profitability in the future.
