Last week, Chase sent me a notice about their “new and improved” checking accounts. The enhancement? My free checking account is no longer free. That may be improved for them, but not for me. I will be closing that account shortly because it was primarily a pass-through account for freelancing income, which I have little of.

Now, there’s word that Bank of America is testing four new checking options that will make it difficult to avoid a fee unless you have the most basic account with direct deposit, paperless statements, and no teller visits. I actually don’t have a problem with that particular account, because we already do all of that. Other than the no teller visits rule, it’s not a big change from their current basic account, which we have. We might visit a teller once a year to cash in collected change, but we can also cash in change for free at Coinstar if we opt for a gift card rather than cash.

Customers “Want” a Fee
The part of the Bank of America story that makes me stabby is their claim that they’re doing this not to recoup the revenue they’ll no longer receive once interchange fees are capped, but so that we can “compensate them” for the cost of checking accounts. And, this is the best pat, one of their spokespeople says, “Many of our customers choose to have a monthly fee. They like that predictability.”

I have never met one person who liked paying a bank fee. Customers don’t “choose” to have a monthly fee. They either aren’t in a position to receive direct deposits or can’t maintain a high minimum balance, so they’re forced into a fee-based account.

Banks Make Plenty of Money Despite Free Checking
In fact, free checking accounts still make the banks money. They do this in three ways:

1. Bounced check fees. Those fees aren’t going anywhere and banks rake in lots of dough for those, especially since they charge the person who bounced the check AND the person who received the bounced check.

2. Interbank loans. They take our deposits and use them to make overnight interbank loans. The interest is small, but when you’re moving millions of dollars, it adds up.

3. Customer retention. Free checking accounts are basically a loss leader. Consumers are more likely to choose other financial services from the bank where they hold a checking account. This includes mortgages, car loans, credit cards, savings accounts, CDs, money markets, and in some cases, investment accounts. The bank might lose 50 cents a month on a free checking account, but they’re certainly making up for that with other products.

Look, I understand that banks are in the business of making money. I don’t begrudge them that. I’m not even get angry with them for wanting to make more money – that’s the nature of business and their duty to shareholders. The part that angers me is their insistence that customers “want” those fees. No, we don’t. In some cases, we accept them because we have no other option, but no consumer wants them. Banks should just admit they need to make up for the lost money from other fees somewhere and not try to convince the public that they’re doing this for us.

Comments

13 Responses to “That Makes Me Stabby: Customers “Want” Fees for Checking Accounts”

  1. Lulu on January 7th, 2011 9:51 am

    I got the crazy letter from Chase as well and I just opened a checking account with Ally. As soon as my checks come in from them I will be closing the Chase account.

    I do not use many checks so I have ING as my main checking account but when I do need a few paper checks I prefer not to have an account that charges me fees for it.

  2. This Week’s Links | Business Pundit on January 7th, 2011 1:09 pm

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  3. Michal on January 7th, 2011 4:30 pm

    I agree! Nobody wants to pay more fees!!

  4. Aryn on January 7th, 2011 6:57 pm

    I just called to cancel my account. When they asked why, I said I didn’t use the account to make it worth paying a fee. The rep laughed and said, “I can understand that.” So at least the reps get it.

  5. Steffie on January 10th, 2011 10:50 am

    Man, credit unions all the way. Every bank I’ve been with has screwed me over some way or another. (800 bucks in the hole over Christmas due to a clerical error comes to mind.) We got a letter from Chase detailing the new fees, and closed our account with them THAT DAY. It is more convenient for us to deposit a check by MAIL with our non local credit union than it is to deal with Chase’s crap.

    Also, I am all for more honesty. We don’t want fees. I call shenanigans.

  6. trisanna on February 14th, 2011 11:04 am

    i agree with Steffie, credit unions are awesome. Ours is very inconvenient, as being in a different state, since we moved to NC 2 years ago, but we make it work with online banking. I can’t stand how these large banks can justify these fees, as they will loose patrons. I guess money is more important to them and they think that we are stupid enough to keep our accounts. I think Arianna Huffington was asking people to switch from large banks to smaller ones and credit unions, to show these banks that we won’t take these fees and their lack of customer service.

  7. Aryn on February 14th, 2011 12:11 pm

    I’m contemplating what we’ll do when BofA rolls out their test plan nationwide. I know it’s coming. Most likely we’ll switch to the free account with direct deposit, but I’m very tempted by local credit unions. As long as I can find one with lots of ATMs so we don’t get hit with ATM fees, I might go with that.

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