Smaller banks no longer offer free checking accounts

In the recent times, Huntington Bancshares as well as several other regional banks as well as community banks have all started offering free checking accounts in a bid to attract customers from the major banks.

But their efforts to attract customers by offering them free services may not remain for very long as the regulation costs will turn into reality by the year end.

Stephen Steinour, CEO, Huntington Bancshares stated in an interview here that they are positioning themselves to be the most consumer-friendly bank and they also hope to grow by increasing their customer base by offering the existing customers good services. While speaking to The Street, Steniour also stated that the bank had launched its new ‘Asterix free’ checking account in an attempt to address customer concerns regarding megabanks implementing fees on their checking accounts.

Bank of America, Citigroup, Wells Fargo, as well as JP Morgan have all added fees to their checking accounts. They have also eliminated some of the rewards programs for their customers and put an end to the complimentary overdraft programs since there has been an increase in the regulatory expenses as a result of the Dodd Frank Financial Reform Act.

Even the major banks have slowly been implementing fees since the last few years, on their checking accounts and are preparing themselves for the expenses that they are going incur due to the Durbin Amendment, which will put a cap on the interchange fees that banks charge retailers on the debit card transactions. Regulators will be finalizing the amendment sometime during July and this could cost the entire banking industry anywhere between $13 billion to $15 billion, according to TCF Financial CEO William Cooper.

The free checking that was being offered by TCF for over two decades will now end as a result of the expenses due to the new regulations.

The community banks and the small banks have normally been the holdouts for free checking accounts in the hope that they can bring in the customers from the larger banks. Jones Day from Chip MacDonald stated that community banks most often waited on the sidelines. All consumer products at banks will be affected by change in pricing. TCF is the one that started the free checking accounts and they are normally the ones who set the trends that are subsequently followed by community banks. Banks normally charge fees on some of the services they offer, be it monthly maintenance fees, ATM fees, paper statements, or minimum balances etc.