Free checking accounts have become elusive due to banking rules

Free checking accounts have become hard to find. Although they have not gone away completely, they have certainly become far more elusive.

Bank of America made an announcement on Friday that it would start charging its customers $5 every month for using the debit card. This will come into effect next year and it is something that banks are already testing in some areas.

Citibank which is another competitor has claimed that it would not be charging on the debit cards, but has started notifying customers about the changes that would be brought in to its checking accounts beginning December 9. In most of the cases, customers who don’t fulfill the new requirements will end up paying a higher monthly fee.

A poll conducted in the month of August by a website found that only around 45% of the big banks offered free checking accounts, which are down from 65% since 2010 and 76% since the last two years. But in the last survey, 92% of the banks offered either free checking accounts or they were free in case the customers were able to meet the necessary requirements.

There are fewer banks now that are offering no strings attached free checking accounts. This is due to a couple of new regulations states Claes Bell. One regulation was brought into effect last year, where banks are prohibited from enrolling their customers into any debit card overdraft protection unless they opt for it.

The Durbin amendment as per the Dodd-Frank Act, took effect on Sunday. According to this amendment banks can charge merchants only around 24 cents from the previous average of 44 cents, as swipe fees when customers swipe their debit cards to make purchases.

So far, banks were using the debit card overdraft fee as well as transaction fees in order to subsidize the free checking accounts. Now, due to the diminishing revenues, most of the large banks are raising their fees.

Bell states that it is still good news as there is plenty of ways to get around them. He also added that consumers must read the communication they get from the banks very carefully, because banks are supposed to notify their customers regarding fee changes well in advance. He also advises customers to check their monthly statements to see if there are any new charges that have cropped up. If they have doubts, they may either call their branch or go there directly to clarify their doubts and avoid the fees.