Free checking abandoned by most banks

Most of the major banks have abandoned the free checking accounts in the last year or so, and have hiked the account fees to record levels. Although there are no signs of an exodus from the major banks consumers appear weary of the new fees that they are being charged.

Jack Sellard states that his bank dangled an offer of $100 in free money and also persuaded him to open another checking account some years ago. Everything was going smoothly until last year when a monthly maintenance fee appeared out of nowhere and started eating away at the bank balance. The customer closed the account immediately.

The retiree customer stated that there were no fees to begin with, but as the rules as well as the fee structure changed, he decided that there was no point in keeping it open.

The free checking account was at one point in time a huge crowd puller and a big marketing gimmick for consumers of all income groups. However, this is an endangered species now as most banking majors such as Well Fargo, JP Morgan Chase, and Bank of America have all abandoned the free checking accounts. The banks claim that they are looking for ways and means to face the revenue crunch and have had to cut down on these free checking account offers.

The banks that were the last ones to jump on the free checking bandwagon are at present the first ones to get off, stated Greg McBride, who is a senior finance analyst from the research company BankRate Inc.

Consumers are clearly weary of the fees but there are still no signs of consumers switching banks in a retaliatory move.

Around 65% of those polled by BankRate during a recent study have stated that higher fees will certainly make them consider switching banks. Amongst those interviewed, a majority of the consumers who were earning over $75,000 were the ones who were willing to make the switch.

McBride states that the banks are taking a risk as the banking sector has spent tons of money attracting the customers who belong to the higher income groups and these are the groups that are willing to make the switch.

Banks are complaining that the present financial reforms have boosted their expenditure while cutting down on their revenues. Hence the free checking accounts have become an unviable option for most of these banks. Now there will be a cap on swipe fees as well.