Say goodbye to the days when all your bank wanted was the privilege of keeping your money on deposit.
Growing numbers of banks are moving to a new business model in which every service comes with a price. The shift has accelerated following the 2010 consumer protection law that limited what you can be charged for overdrafts and late credit card payments. New regulations reduced by nearly half the sums that banks can collect from merchants on debit card purchases.
To make up for that lost revenue stream, Bank of America, SunTrust, Citibank and others are charging consumers for services that had been free for years. The move has triggered anger among many Americans, including some who joined the Occupy Wall Street protests against banks for their role in the financial crisis.
The demonstrations that started in New York last month spread to other cities, with marchers also voicing concerns over joblessness, corporate tax loopholes and other issues.
Despite the groundswell directed at banks, you can expect some financial institutions to charge for once-free services such as:
- Using a teller.
- Swiping your debit card for a purchase.
- Getting bank statements and canceled check images mailed to your home.
- Maintaining a checking account.
Bank of America generated perhaps the most criticism when it announced recently that it would charge a $5 monthly fee for debit card purchases beginning early next year. Wells Fargo and J.P. Morgan Chase say they're likely to follow suit by test-marketing a $3 debit card fee in several states.
Citibank, meanwhile, told customers of its interest-bearing checking accounts that they must maintain a $15,000 balance, up from $6,000, or pay a $20 monthly fee. To receive free checking in its non-interest-bearing accounts, customers must have a $1,500 balance; otherwise, they will pay a $10 monthly fee.
SunTrust, Citibank, Bank of America and others also put an end to free checking unless you maintain a minimum balance or have a direct deposit arrangement.
According to a Bankrate.com survey, the number of U.S. banks offering free checking has dwindled from 76 percent two years ago to 45 percent this year.
The survey also found that 64 percent of Americans said they would change banks if their checking account fees increased.
"Customers have clearly had it up to here with fees," says Greg McBride, a Bankrate.com senior financial analyst.
Nessa Feddis, senior counsel at the American Bankers Association, says that provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act have cut into bank income that pays the costs of providing checking and debit services.
“If government intervenes in markets and eliminates a source of income, a bank, like any other business, has to find some way to make up that lost income,” she says.
But Edmund Mierzwinski, consumer program director at the nonprofit U.S. Public Interest Research Group, says banks are using the new regulations as an excuse to raise consumer fees. "Bank of America and others are rolling out debit card fees because they can, not because they need to," he says. His group has studied bank charges since the mid-1980s.
Customers such as Marc Kruskol, 54, of Palmdale, Calif., are using their feet to say no to fees. He recently closed his checking account at J.P. Morgan Chase because he didn't want to keep the required minimum balance in order to avoid fees. He moved his money to a credit union offering better terms.
"I don't like giving money away," he says. "When [banks] start charging, this is the end."
Debi Goldben says she was fed up with new fees imposed on her checking account at a Florida bank. The 53-year-old marketing coordinator closed that account and opened a new one at a credit union.
Also of interest: Why try a credit union? >>
Bob Calandra is a freelance writer living near Philadelphia.