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Why Free Checking Accounts Are a Thing of the Past

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Banks are cutting back on free non-interest checking accounts because of Dodd-Frank regulations.

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MINYANVILLE ORIGINAL Thanks to regulatory changes, US banks are cutting back on "free" checking accounts and raising ATM charges to record highs, a new survey finds.

According to financial research firm BankRate.com, which looked at 477 checking accounts from 247 banks and thrifts, only 39% of all non-interest checking accounts offered by US banks are available to customers free of charge, compared to 45% a year ago, and a high of 75% in 2009.

Additionally, the average monthly fee that customers are paying for these checking accounts also rose 25% to a new record high of $5.48, while the average minimum balance they must maintain increased 23% to $723.

Meanwhile, the average cost of using an ATM also went up for the eighth successive year to another new high of $2.50.

The gradual decrease in the availability of free checking accounts is one unintended consequence of the Durbin Amendment, introduced in the Dodd-Frank financial reforms, argue the banks.

In the past, banks charged merchants $0.44 each time a customer paid using a debit card. After the Durbin Amendment went into effect, banks could only levy a fee of up to $0.24. The amendment, together with another law introduced in 2010 that capped overdraft charges, meant banks would lose up to $10 billion in revenue per year.
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