PHILADELPHIA (CBS) — With the new year comes a new wave of bank fees that are starting to hit consumers. This time right in their checking accounts.
Music teacher Phil Johnson has the checking account blues. He says, “My free checking account that I’ve had for years is no longer free and they’re going to charge me ten dollars a month and give me no further service than they have in the past.”
People across the country are getting the same bad news: their non-interest checking accounts that used to be free-will start to cost them! Greg McBride is a Senior Financial Analyst at Bankrate.com. He says, “This is turn around from the trend we’ve seen in recent years and it’s likely to continue in the years to come.”
Bankrate found in 2009 76% of banks offered free checking, but in 2010 that number dropped to 65%. According to McBride, “The factors that are impacting free checking are hitting institutions of all sizes: large banks, small community banks and credit unions.”
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Why the disappearing act on free checking? The banking industry says banks are now losing money because of tough economic times and new laws which limits overdraft fees and debit card fees it can charge. Nessa Feddis is with the American Bankers Association. She says, “Checking accounts are like any other products or service whether its cable or telephone or television there are costs associated with providing those services, and those costs have to be recovered in some ways.”
Phil Johnson’s bank, like others which are now charging for checking, say the only way he can avoid paying a monthly fee is to meet certain requirements. In his case, he must maintain a minimum daily balance of $1500 dollars, have a monthly direct deposit of more than $500 dollars or pay more than $25 dollars in fees a month. All of which is out of tune for this music teacher. He says, “I’ve been a good solid customer for four years I’m never a guy that you know, writes bounced checks or overdraws, none of that kind of stuff. I cost them very little money.”
The American Bankers Association says the average checking account costs a bank about $300 a year, that includes costs to send out statements, operate websites and deal with government regulations. Some banks are offering customers $50 or $100 to open a new checking account-but be sure to factor in the monthly fees that bank charges you so you don’t lose money in the long run.
Reported by Jim Donovan, CBS 3